M&A announcement

Apr 15, 2026

Please be advised that today's conference is being recorded. I would now like to turn the call over to Head of Investor Relations, Mr. Brendan Fitzpatrick. Thank you. Please go ahead. Thank you, Desmond, and thank you to everyone joining us for this briefing on Yancoal's acquisition of an 80% stake in the Kestrel coal mine. We have Sharif Burra, our Chief Executive Officer, and Kevin Su, our Chief Financial Officer, to provide an overview of the acquisition, and several members of Yancoal's executive leadership team are also present to participate in the question and answer session. Desmond mentioned the phone lines. There is also the opportunity to submit written questions via the webcast. You can do that at any point. The commentary provided today is based on the announcement and presentation published on the Australian Securities Exchange and the Stock Exchange of Hong Kong announcement platforms last night. Slides two and three contain notices and disclaimers relevant to today's presentation and the forward-looking statements it contains. Please make yourself familiar with the content of these two slides. Throughout the presentation, we use Australian dollars unless otherwise stated. Sharif will now provide the transaction overview. Thanks, Brendan, and thank you to everyone joining us on the webcast. We really appreciate you taking the time at short notice to hear about this exciting update. Before looking at the transaction in more detail, I want to take a moment to thank all the people, both within Yancoal and our corporate advisors, who contributed to getting us to this point. It takes an incredible amount of effort from teams working cohesively to bring an acquisition of this nature to fruition. Slide five provides the transaction summary. Last night, we announced that Yancoal has agreed with EMR and Adaro to acquire their 80% ownership in the Kestrel coal mine through the 100% acquisition of the Kestrel Coal Group. Kestrel is a high-quality, long life metallurgical coal mine, which we view as strategically aligned with our operating strengths. Being a producing mine from the date of completion, Kestrel will immediately contribute to our production volumes and operating cash flows and will increase the metallurgical coal contribution of our portfolio. On completion, Yancoal will become the operator and majority owner of the mine. Our partner in the mine will be Mitsui, which holds the other 20%. We consider Mitsui a strong partner and look forward to working collaboratively with them as co-owners of the Kestrel mine. The upfront consideration is $1.85 billion. This includes a $40 million deposit. There is contingent cash consideration, which is capped at $550 million with payments only made if annual benchmark coal prices exceed a threshold price. We will fund the upfront cash consideration through existing cash on our balance sheet and a $1.2 billion acquisition facility. We also have in place a $200 million U.S. working capital facility for additional support. If payments are required in the future for the contingent cash consideration, we intend to fund them from operating cash flows as they represent an upside revenue share arrangement. The acquisition is subject to conditions and approvals. Provided all the conditions are met, we aim to complete the transaction towards the end of the September quarter this year. Turning to slide 6, the map shows Kestrel's location in the Bowen Basin and its position relative to other Yancoal mines and regional infrastructure. Why do we like the acquisition? It is a large-scale operation that produced 5.9 million tons of high-quality metallurgical coal last year. It enhances our existing portfolio by adding a significant hard coking coal volume to our product mix. It has a long mine life, 25 years of production, fully underpinned by 164 million tons of marketable reserves. It has strong margins. At last year's coal prices, and with cash operating costs of AUD 147 per ton, Kestrel was in the top 35% of global seaborne metallurgical supply on the margin curve. It has infrastructure and logistics in place and proximity to other Yancoal mines. Looking at slide seven, we can see the acquisition in the context of Yancoal's 22-year journey to prominence in the Australian coal sector. It started with a single mine, Austar, back in 2004. I'm sure many of you know this is where I started my journey with Yancoal in 2005, a technical underground operation where I was the underground mine manager. Over the next two decades, the company acquired, expanded, and optimized mines to become Australia's second-largest coal miner. We see this acquisition as continuing our strong track record of value creation through selective acquisitions. I'll now hand over to Kevin to take a closer look at the strategic rationale for the acquisition. Thank you, Sharif. The next five slides is for the five key points on slide nine. They are scale and diversification, longevity and margin, metallurgical coal market exposure, cash flow contribution and attractive multiples, and utilization of cash and debt structures. Slide 10 looks at the increased scale and diversification. We see the attributable saleable production extending our position as the largest pure play coal company listed on the ASX. However, we're not adding volume just to increase the short-term output. The additional reserves represent about 17% of the pro forma marketable reserves. This highlights that it's not just additional volume, but long-term volume. Using 2025 production data as a reference, we see Kestrel diversifying both our product mix and our geographic profile. Slide 11 compares Kestrel against the other underground coal mines in Australia. It is the largest underground coal mine, just ahead of our own Moolarben mine, and by far the largest metallurgical underground mine. It has the third largest marketable reserve base of any underground mine. These reserves support a 25-year mine life. Importantly, it's a productive mine. Using production volumes per employee as a productivity measure, it is ranked second behind our Moolarben mine. Yanco knows how to operate large, efficient, longwall coal mines, so we see ourselves as more than capable of successfully integrating Kestrel into our portfolio. Slide 12 provides information on type of coal produced by Kestrel. 80% of production is hard coking coal, which is priced off the Platts Premium Low Vol Hard Coking Coal Index. This product is very well-regarded by Kestrel's customers and is one we don't have in our current product mix. The remaining 20% is de-gassed seam at a high energy thermal coal, priced against the globalCOAL Newcastle Index. This is similar to the thermal coal we produce from our Hunter Valley mines. We see Kestrel's products as enhancing our position in international coal markets. On slide 13, we have projections for the metallurgical coal markets out to 2050, the horizon raised by Kestrel's 25-year mine life. While the metallurgical coal prices have been subdued in recent times, our view, which is supported by external industry analysis, is that a supply deficit likely emerges in the future. The increased global demand will be driven by Asia, and in particular, India. Kestrel is already supplying into India, with over 30% of sales going there in 2025. The additional sales to India further diversifies our customer base. Kestrel's next three largest destinations for the sales are ones where we already have strong customer relationships. Moving on to slide 14, we see the EBITDA generated by Kestrel over the past five years, and importantly, the strong EBITDA margins. These margins are very similar to Yancoal's margins over the same period, further demonstrating that this acquisition should complement our existing operating margins. Using the 2025 EBITDA and an upfront consideration as a proxy for enterprise value, the EV to EBITDA multiple we are paying for Kestrel is below a peer group average. In summary, we see the acquisition adding operating cash flow and margins similar to our existing portfolio at a favorable multiple. Slide 15 gives additional information on the funding structure. We will utilize $650-$850 million US from our cash balance. The final amount will be influenced by our cash balance at completion, which in turn will be most significantly influenced by our achieved coal price between now and completion. The remainder will be funded through a $1.2 billion US financing facility with additional support available through a $200 million US working capital facility. The funding structure allows us to maintain a strong financial position with a healthy cash balance to support operating requirements and dividend distribution in line with the company's constitution. On a 2025 pro forma basis, our net debt to EBITDA leverage ratio would be 0.9-1.1 times, and our gearing would be 15%-18%. In the context of broader capital management objectives, we see this as appropriate outcomes. I'll now hand it back to Sharif to look at the Kestrel mine more closely. Thank you, Kevin. Slide 17 recaps some of the information we've seen earlier in the presentation. Kestrel is a large-scale operation producing predominantly high-quality metallurgical coal and has a long mine life. It produced almost 6 million tons of saleable coal in 2025 on 100% basis. Our share of the saleable coal production will be 80%. Over the past eight years, about AUD 1.4 billion has been invested in the mine and infrastructure. We view it as being in good condition and well-placed to operate efficiently in the coming years. The existing mine plan incorporates larger and more productive longwall panels in future years. These are referred to as the 600 and 700 series. On slide 18, we see the past operational performance. Kestrel has a strong history of yield and saleable coal production. The chart on the lower right of the page shows the margin curve for global seaborne metallurgical coal supply. Unlike a cost curve, which only considers production costs, the margin curve captures the difference between realized price and cash operating costs. This normalizes for coal quality and gives a truer sense of relative position against global peers. Kestrel sits in the top 35% of global metallurgical coal supply on the margin curve. We view this as one of the clearest indicators of its quality. Slide 19 shows an aerial view of the mine and its infrastructure. As mentioned earlier, it's been well-funded in the past and the infrastructure is in good condition. The 10.5 million tons per annum capacity in the coal handling and preparation plant exceeds current run-of-mine coal production rates, ensuring it will not be a constraint. Slide 20 has additional information on the logistics. The two main points to note are contracted rail volumes of about 6.8 million tons per annum and contracted port capacity of 7.8 million tons per annum. Both contracts provide excess capacity over the typical annual production rate, again, ensuring neither will be a constraint. Slide 21 provides a detailed comparison of our existing mines and Kestrel. Kestrel complements and balances the existing portfolio with regard to geographical spread, mine type, product type, and scale of production. We included slide 22 as a reminder of how Yancoal performed after our last major transaction, the acquisition of interests in the MTW and HVA mines in 2017. Since 2018, we've returned over AUD 5.3 billion to shareholders as dividends. More than half of this amount was fully franked. We repaid debt early and were in a net cash position within five years of that acquisition. Following the Kestrel acquisition, we will have put our balance sheet back to work. As Kevin mentioned earlier, the pro forma gearing ratio would be approximately 15%-18%, half the level it was after our last acquisition. Post-completion, we see Yancoal well-placed to continue its capital management objectives of balancing our financial position, distribution to shareholders, and future growth initiatives. The final slide is an adaptation of the slide that closed out our 2025 results presentation in February. The Kestrel acquisition allows us to build on the outlook for this year and beyond. We have an experienced management team and workforce, and we are excited about working with the team at Kestrel and Mitsui. Scale and operating margins are two key elements that drive our performance. We see Kestrel contributing to both of these. The transaction will apply an appropriate mix of cash and debt that leverages our balance sheet strength. We have a proven history of returning cash to shareholders in accordance with our dividend policy and see the cash flow from Kestrel contributing to this capability. Post-acquisition, we still aim to create future value for shareholders by continuing to deliver strong production and cost control performance with balanced capital management. We strongly believe Kestrel is a high quality and attractive acquisition that will deliver on Yancoal's value-adding growth aspirations and positions the business to deliver strong performance and shareholder returns in the future. Now I'll hand back to Brendan to open the Q&A. Thank you, Sharif and Kevin, for taking us through this exciting update on the business. We will now move on to the question and answer session, starting with questions from the phone and then moving to questions submitted via the webcast. Desmond, could you please initiate the process for questions from the phone? Certainly. As a reminder, if you'd like to ask questions on the phone, please press star one and one on your telephone. One moment for the first question. The first question from the line comes from Glyn Lawcock from Barrenjoey. Please go ahead. Oh, good morning. A couple of questions. Firstly, just once you take control of the asset after regulatory approval, do you have any thoughts around whether you would sell down to a steel mill? I mean, obviously, previous acquirers have all chosen to sell down. Is that something you'd consider, or given the financial position of the company, there's no need? Thanks. I have a second question. Sheriff? Yeah. Look, thank you for the question. It's not something we're currently considering. Okay, that's great. I'm conscious you haven't yet taken control of the assets, but obviously you did a lot of due diligence. Just a couple of questions around that. The cost base, as you said, AUD 147 a ton. Do you see much opportunity to do much with that based on what you've seen so far with the asset? There seems to be excess port and rail associated with the Kestrel mine relative to the 6 million tons. Is there capability across the rest of your portfolio to maybe take advantage of that once you get ownership? Thanks. Yeah. Look, thanks for the question. Our primary objective is to continue operating the Kestrel mine as a successful, productive, well-managed coal mine. We will obviously spend our time and have a good look at the asset and look for opportunities with regards to costs. With regards to logistics, again, we haven't factored in any synergistic benefits with regards to the deal at this stage. We'll certainly be focused on those opportunities as and if they present, once we have acquisition or once we've taken control of the Kestrel mine. Thanks very much. Thanks. Please hold for the next question. We have our next question from the line of Lawrence Lau of BOCI. Please go ahead. Hi. Thank you for taking my question. I have a few. First of all, I realized that the processing yield of this mine is quite high, 75%, 76%. I just want to like to know, do you think this kind of processing yield can be sustained in the future? Secondly, I understand that Mitsui holds the preemptive right. I just wonder if you talked to Mitsui at this stage, and what is the attitude of Mitsui about this transaction. Thirdly, what is the estimated maintenance CapEx of this mine after you take over? Finally, I realized that there's an estimated transaction cost of AUD 200 million. Sorry, $200 million US dollar. I just would like to know, will that be charged against your P&L or will it be considered as part of the consideration? Thank you. Okay. Lawrence, appreciate that. Four questions there. Let's go back to the start, looking at the operational profile, that 75% yield the assets delivered in the past. What can we say about the potential yield going forward, do we think? Yeah. Thanks, Lawrence. As a first port of call, I'd point you to Appendix 3 of the market release and the Competent Person's Report, and the JORC statement, and all of that information should be in there in quite a comprehensive amount of detail. With regards to Mitsui, I'm not gonna comment on Mitsui. Having said that, we have a very good relationship with Mitsui. We hold them in the highest regard, and we really look forward to working with them at Kestrel. Thanks, Sharif. The next question of the four was maintenance CapEx. Perhaps, Kevin, do we have anything that we can offer on a view for maintenance CapEx going forward, or is it too early at this point to have established a view? We do have a technical model from our due diligence work. We are not in a position to disclose better forecasts for now. Thanks. That final question from Lawrence, the AUD 200 million that's been identified as transaction costs. The question was how would that be expensed and recognized on our income statement? Lawrence, out of the AUD 200 million transactional costs we indicated, majority of it is stamp duty. For stamp duty purpose, we have to recognize it as tax expense. Thanks. Thank you, Kevin. Okay. Lawrence, was there anything further? I think that's good enough at this stage. Thank you very much. Thank you. Desmond, do we have further phone line questions? You have follow-up questions from Glyn Lawcock from Barrenjoey. Please go ahead. Good morning. Thanks again for taking some follow-ups. Just wanted to understand the balance sheet of Kestrel. Could you maybe provide a little bit of color around the actual balance sheet that you'll be inheriting, and will that come across, or will it come across with just inventory? Thanks. I had a second one after that. Thank you. Glyn, I'll look to Kevin in the first instance. The Kestrel balance sheet, what can we say about the nature of the assets and liabilities that would carry across upon completion? First of all, the acquisition is on Kestrel debt-free basis. When we look at the bidding, it's clearly bid on enterprise value. If we look at the existing balance sheet structure, they do have some debt to support the previous acquisition since 2018. Which is something we need to adjust as part of the completion costs. At the end of the day, as I mentioned, the acquisition basis is cash-free debt-free. Thanks. Okay. Just the second question was just around the coal. You talked about it being 80% metallurgical, 20% thermal. I just wonder if you could maybe break down a little bit more. Is it a mixture of sort of semi-soft coking coal and semi-hard, or what sort of price relativities we should be expecting for the met mix and then also similarly for the thermal? Any sort of comments you can help us understand the price realizations for the coal types you expect from Kestrel. Thank you. Hi, Glyn. Certainly appreciate the interest in that topic from the market perspective. We do have the Competent Person's Report, which provides a detailed view of the assets. In terms of the product mix, what's probably the most reasonable thing to say at this point in time is the 80%, 20% split, as indicated on slide 12. That's indicative. The production profile will vary over time, depending on which locations are being mined, the coal quality, and even how the wash plant is utilized to optimize output and meet customer requirements. I expect our marketing team will be looking to leverage their capabilities in that regard. I think we'll leave it at the indicative level at this point in time. Once we have moved to acquisition and operation of the asset, we'd be in a far better position to provide a more definitive view going forwards. All right. Thanks a lot. I'll move on to some webcast questions now. We'll come back to the phone lines later to see if anything else has come through. Something high level to start with. We're putting some of our balance sheet to work. There's an interest in knowing how our capital management plan will look going forwards, whether there'll be any shift in priorities, what the transaction might mean for dividend policy in the forward periods. Kevin, could I look to you in the first instance, please? Sure. Thanks, Brendan. In short, Yancoal will not change our position about dividends. Yancoal has a strong track record of disciplined capital management and returning value to shareholders. Following the transaction, the company expects to retain such flexibility to balance objectives across shareholder return, balance sheet strength, and the funding future growth. I put a few numbers here, and you can see, we disclose our cash balance as more than AUD 2.1 billion as of the end of last year. Then in the presentation, we quoted, the upfront cash, potentially gonna be $650 million-$850 million, which is equivalent to about AUD 900 million-AUD 1.2 billion. By the way, disclosed last time, that's about AUD 2.1 billion cash. As such, we do have sufficient liquidity. Yeah, thanks. Thanks, Kevin. Let's stay on the topic of the balance sheet and the capital management. Several questions coming through of a similar topic, so I'll amalgamate them. The general thrust of the questions are the U.S. $1.4 billion debt facility. What can we say about that in terms of the interest rate it'll carry, the financiers, the tenor of the facility, and how that will fit into our balance sheet? We would love to share, but for now, a lot of key terms, including the one Brendan just mentioned, subject to confidentiality provisions. As a result, we are not able to disclose internally. The one thing we can assure the market, the interest rate is very market consistent and competitive for a five-year facility, and this is in line with the prevailing international syndicated loan market conditions. Thank you. Let's extend on that topic. Would there be a scenario where the balance sheet and the funding structures could be restructured over time? Is there a process where the bonds or other elements could be utilized at some point subsequently? The short answer is yes. As of today, we do believe we have the most effective acquisition funding structure, but we will keep improving it. If we do identify, in the future, better opportunities by refinancing the facility, we can achieve a better cost profile. We could further improve the financing structure. Thank you, Kevin. Let's move on to the topic of some of the elements on the income statement that are coming through. I'll link a few questions here. There's one that's observing the difference between the apparent EBITDA and net income for the reported 2025 period from Kestrel, and an extension of that or a variation on that is the price to earnings ratio relative to the EV to EBITDA multiples that we did carry in the presentation pack. What can we say about that past performance in 2025 and any future outlook for earnings, EBITDA, multiples going forwards? Kevin, I think I'll turn to you again for this one. Yep. Thanks, Brendan. First of all, the valuation is very comprehensive, but from a complete picture perspective, we probably will not look at this whole valuation from PE perspective, but we probably look at an EV/EBITDA reserves multiple, and then we also need to consider the life of mine is 25 years. Then another reason why probably it's not the best idea to refer to 2025 EBITDA or PBT, as there are a lot of reason for the 2025 profit at a lower point, such as very relatively low average coal price. They do have some impact from costing perspective. We know there's some abnormal items in 2025. Also, they have some sales volume issue as well. As a result, without the intention for elaborating, we do feel we need to have more comprehensive valuation methodology around this number. Thank you. All right. Thank you, Kevin. Jasmine, could I come back to you to check for the phone line, please? We do have a question from the line of Peter Wong of CICC. Please go ahead. Peter, your line is open. You can go ahead. Yeah. Thank you. Most of the questions have already been addressed by the company. I would just like to follow up with two more questions. Firstly, regarding financials of the Kestrel mine itself, what was the ASP for the mine in 2025 and the cash cost, including current royalties, what would that be? Peter, I caught the first part of the question. You were asking about the achieved sale price in 2025 for Kestrel. I missed the second part of the question. Could you repeat that part, please? Yeah. What about the cash cost, including royalties? Cash costs, including royalties. Okay. We do have the FOB cash costs that's mentioned in the slide pack at AUD 147, FOB. The royalties would be calculated on that Queensland royalty structure, which is tiered. I don't have that number at hand, but if we do have a comment on the achieved sale price, then someone will be able to back calculate it outside the call. I'll just look to anyone. Do we have the achieved sale price? $145 a ton. $145 per ton in 2025 was the achieved sale price. I see. That's the blended ASP, right? That's right. What we referred was the ASP. Yeah. Okay. I see. I will just move to my second question. Do you have any plans to expand the production level at Kestrel, or you would just continue to maintain the production at around 6 million? Okay. The question is production expansion beyond the current run rate of 6 million tons on a 100% basis of salable product. Sharif, I'll hand to you. Yeah. Our intention is to run the asset, as it has been run at that indicative production level. Having said that, once we have operational control, we'll always look for opportunities for further improvement. Understood. Thank you. That's all my questions answered. Thanks, Peter. Thank you, Peter. I'll go back to the webcast. I appreciate there are people who've lodged questions concurrently, so there is some overlap and some that have already been addressed. I'm looking at debt facilities and tenor that's been covered. There's another question on the debt. It notes we raised the debt in U.S. dollars. Was there any consideration to alternate currencies such as an RMB borrowing strategy? Fortescue was an example of that. It was provided by the person asking the question. Thanks, Brendan. Yancoal is very open for all sort of financing options, as the chair mentioned, and including the RMB facility, which we have very strong relationship with many Chinese banks to achieve a lower interest rate as the question just mentioned. However, it's slightly more complicated topic as this involve hedging foreign exchange risk, which need to be also considered jointly. Thank you, Kevin. We've touched on the cash-free, debt-free basis. Looking at the operational aspect of the mine, there's a question about the current mining leases, development licenses, environmental approvals, and so on, asking for some sort of comment on timeline and renewal processes. Mindful that we've talked about the 25-year mine life and we're looking for some context. Perhaps could I turn to Sharif initially and then move to a more detailed observation? Yeah, thanks. I think the first point I'll make here relates to the Kestrel West approvals, which are being progressed well by the site team. Sufficient timeframe to obtain these approvals ahead of commencement of mining in Kestrel West, and this is scheduled for the early 2030s. We'll obviously provide an update to the market as and when one's available, when we have operational control. Yeah. With regards to, especially MDL 182, that tenement, although it comes up for renewal, that work is currently ongoing and that application needs to go in in the next month to be in time for the required six months before that expiry. Other than that, there's no other issues on the MDLs. I think fair to say all these would be seen as business as normal processes to work through. The reserves underpin the mine life. The mining license covers the reserve that sits in the allocated region. Let's move on to the next question. Mitsui's preemptive rights, we've touched on that earlier. Something of a more technical nature with regards to the current longwall panels, the future longwall panels. There's a reference to currently mining in the 500 series, moving to the 600 or 700 series some years into the future. Do we have any knowledge or comment on fault depth, coal mining aspects on productivity, and whether that links through to a view on yield in past periods compared to the future periods? Yeah, again, Brendan, I'd point you to Appendix 3 of the market release, the Competent Person's Report, and there's certainly sufficient detail within that, I believe, to answer most of those questions. If I can add on to that. As part of the due diligence work, we do assess all these areas. We assess the faults, the work that's gone in, the integrity and the confidence of it. All of that is being assessed as part of the due diligence. Thanks very much. Looking at the price realization and the benchmarks we reference. The reference in the materials, the Platts premium low vol hard coking coal benchmark. What relativities are assumed in the contingent consideration modeling? We do have a footnote in the announcement that provides an example. Kevin, perhaps if you could just reiterate that example of how the contingent cash consideration could be calculated. Yeah. It's basically when the average sell price, when the hard coking coal index price above $202.5 on annual basis, average annual basis, then we will, based on the relativity, and to profit share 30% of the revenue. However, better relativity as of what we have announced is 85% on page 3, the footnote 10. We have an example how this calculation will be done, and we quoted a realized pricing relativity as 85%, which is only indicated, and this may vary, it depends on the future production conditions. Thanks. Thank you, Kevin. There is a question of a similar nature. It's identifying that the coal quality from Kestrel, while priced against that benchmark, is somewhat different, and the price realization or the discount achieved. That's what we've been talking about. In the past periods, it's generally been about 85%, but that would vary at times depending on market conditions. I think that's a reasonable observation. Is there anything additional you can make on that? No. I'm getting head shakes around the table. Another question on net debt, which we've covered. Going back to some higher-level topics of conversation. We touched earlier on about capital management and use of the balance sheet, having positioned ourselves to acquire the Kestrel mine. What is Yancoal thinking about future growth opportunities, M&A scenarios, and what the company might or might not pursue in forward periods? Sharif, could I turn to you for a comment on how we might think about growth beyond this opportunity that we've positioned ourselves for? I think with regards to other M&A activity, I won't comment on market speculation. Our focus at the moment is on executing the announced acquisition of Kestrel. There is potential for mine life extension and regional upside at Kestrel, including progression into additional mining areas and broader opportunities within the surrounding hub. We will assess and look at those opportunities over the course of time. Thanks, Sharif. Another high-level question. Looking at the capital structure of the business, we talked about the potential for refinancing or restructuring the balance sheet earlier, Kevin. Is there any scenario where the free float of Yancoal could be increased? If so, how might that play out? Yeah, that's a very good question. We have been looking into any potential options could further improve Yancoal's free float, but this largely depends on two major shareholders, which is Yankuang Energy and Cinda, who have been holding about 70% of Yancoal shares, any willingness for them to dispose in the market. Also there's some other potential equity-raising opportunity could further improve the free float. But this is gonna be considered in due course at a later stage. Thank you, Kevin. Let's look to the coal markets now. I'll come to you, Mark Salem, our EGM, Marketing and Logistics, who joins us online. One of the questions we have coming through Mark is. What is the company's view on the future coal price and demand from Asia? Then I'll extend to some additional comments about the Kestrel products. Mark, if I could turn to you in the first instance for a comment on the company's broad view on the future of the price for coal and demand in Asia. Sure. Thanks, Brendan. Sorry, I'm just remote and I hope there's no feedback. No, confirming the sound quality is coming through well. Please proceed. Okay. Thank you. Look, I think from a hard coking coal point of view, as slide 13 shows, there's a definite deficit of supply going into the 2030s, and that's one of the attractions of increasing our exposure to hard coking coal. That market will continue to grow, as you can see, the growth also on slide 13, with the growth of India and Southeast Asia. If you look at typical supply-demand dynamics, if there's a shortage of supply with increased demand, that should see strong prices moving forward. Naturally, any forward price assumptions are based on a lot of analysis, and we use our independent forecasters to help us and assist us in forming our forward pricing views, which of course, we can't necessarily disclose. Thank you, Mark. In terms of the market mix, again, it will expose Yancoal to a greater market in India. Currently, our exposure is only around 3%-4% of our sales currently are into India, whereas the Kestrel profile will increase that exposure into the growing Indian market. Thanks, Mark. That leads into another question which talks about the market breakdown of Kestrel. We can see that we've provided that pie chart in the presentation pack on slide 13. India at just over 30% being the largest single destination, and then North Asia, where we already have existing customer relationships. One question we have on the product and the links to the customer breakdown is: With Mitsui as the 20% partner, how does that work in terms of the offtake from the production volumes, the marketing rights? What are we able to say about the product split and how it enters the market and who influences or where it goes? Sure. Thanks, Brendan. Look, I can't really comment on Mitsui's position at the moment because naturally a lot of the more commercial confidential information will only become available to us now. I understand Mitsui has a very cooperative relationship with the markets, especially in Japan. They don't actually have an offtake per se, as we understand currently. We will be working very closely with Mitsui to develop those markets. In relation to the broader marketing mix, a lot of the Japan, Korea, Taiwan steel mills are existing customers of the Yancoal portfolio, and so we already have strong relationships with those customers. Is there any part- Sorry to cut you off. Keep going. No, I was just wondering, did that answer the question? Yeah, I think that was very satisfactory. Thank you. I appreciate we've got 10 minutes left till the scheduled termination of the webcast. Desmond, I'll come back to you just to check if we have any more questions coming through on the phone lines. If not, I'll use the final 10 minutes to continue with webcast questions. Desmond, any phone line, please. No questions at this line. Please continue. Thank you. Looking at some of the operational questions in detail, there was an observation that there may have been some past production issues at the Kestrel mine. Looking for some comment or clarity on what may have occurred in the past, the current situation, and how Yancoal would intend to operate the mine once it becomes the operational control entity. Thanks, Brendan. I think this probably refers to the frictional ignition event in December of 2024, which Kestrel had on Longwall 501, when the shearer maingate drum contacted the seam and ignited a small pocket of methane at the coalface, resulting in production interruption for about three weeks. The operation was safely and successfully returned to steady state thereafter. This was certainly one of the key areas of technical due diligence for us. We spent a lot of time building our understanding of operating procedures and the geology and the gassiness of the resource, et cetera. We're quite confident with our technical expertise and experience regarding that aspect of the Kestrel mine. Okay. Pulling that through, revisiting that topic of CapEx. We talked about the total spend over the past several years. In the context of CapEx going forwards, we'll assess that in the future. As we note, the asset has been well capitalized, and we certainly don't see it needing undue CapEx in the short term. Thanks, Brendan. The coal handling preparation plant had significant capital investment, as has the longwall and the second set of longwall equipment, in addition to gas drainage activities in the current mining areas. Okay. There are several questions coming through that are financial in nature. Kevin, I'll look to you for some of these questions. With regards to the cash contingent component, the $550 million we've identified, is there any inflation adjustment? Does the 225 average price reflect the operational cost inflation? And is there anything that, or any nuances that we need to be aware of with that cash contingent calculation? The $550 million contingent payment is not inflation adjusted. The $225 U.S. dollar per ton average price is the nominal price to be used for calculation. Thanks, Kevin. On slide 14, we present the EBITDA over the past five years. There's a question asking, what would the free cash flow have been after CapEx? Do we have the details at hand to provide a response to that? We do have the free cash flow post CapEx, but we have a lot of numbers. Happy to discuss. For example, take 2023 as an example. It is AUD 320 million, and 2024 is AUD 192 million, and 2025 post CapEx is AUD 124 million. Thanks, Kevin. Obviously linking to the EBITDA profile, we can see on slide 14, there are those coal price cycles working through for Kestrel, much the same way as we've seen for the Yancoal portfolio over a similar time frame. Expansion and contraction of EBITDA and free cash flow with the coal price cycle. We've got another question here. The mine profits on 100% basis, identified as being $36 million in 2025 and $14 million in 2024. What can we say about the profitability in past years and how we viewed the asset acquisition and the value opportunity for Yancoal going forward? Kevin, if I could turn to you. Thank you. Sure. Thanks, Brendan. As I mentioned earlier, take 2025 as example. We appreciate the profit in 2025 was unfortunately low, but it's due to quite a few reasons we have already identified. First of all, the main driver was very low average sales price. As I mentioned, the ASP was $145 per ton. This is comparatively much lower than the previous one. During the year, we also understand, due to the frictional ignition accident what the CFO just mentioned, they also have an internal product mix change. As a result, the higher thermal mix compared with the coking coal proportion. Then due to how to manage the issue, they need a put in all the cooling cost and also carbon tax, plus, due to the ignition events, they reduce the production. Then also the sales. As a result, we have much lower sales. That's about a 5.4 million shipment versus 8.2 million runtime. There's a lot of reason to just unfortunately contribute to a lower profit in 2025, and that's exactly what I have been considering in the valuation model. Make sure in the future we consider all these different drivers, from valuation perspective. Yeah. Thank you, Kevin. A few people have asked a similar question. Curious to know if we can provide the identity or the breakdown of the lenders for the debt facility. You mentioned earlier it's at commercial in confidence terms. I don't know if we're in a position to disclose that. We are not able to disclose the identity of the banks. One thing we could disclose is, if after completion, in our annual accounts, there will be an average funding cost, which is a standard disclosure item. By then, you could see the average funding cost. Thank you, Kevin. Coming back to that concept of completion, we've targeted completion by the end of third quarter this calendar year. Are there any specific undertakings or conditions that Yancoal anticipates from FIRB regarding the ownership structure? Any other conditions that might be relevant to reaching completion as planned? Perhaps, Sharif, in the first instance for a view on the completion date and the requirements we'll have to Yeah. Definitely. It's nearly finished, but if you want to make a. Thanks, Brendan. Yeah, look, we've nominated our completion date, and we'll obviously be working towards that. With regards to FIRB, I'm not going to comment on any anticipated conditions that may or may not eventuate in that regard. What I would say is if you look at the history of Yancoal, we have a very strong track record of merger and acquisition, and I'm confident that we will be in a strong position to obtain these approvals moving forward. Thank you, Sharif. I appreciate we're right on the 12 o'clock cutoff mark. I can see there are several more questions coming through. I apologize that we've not necessarily covered off each and every question that the participants have had. I am available, the team is available. Please reach out through the email channel in the first instance, and we will follow up with any unresolved questions that exist. If, Sharif, I could hand over to you to provide the closing remarks, and we'll move to conclude the call on time shortly. Thanks, Brendan. As I said at the start of the call, I thank you all for joining us on limited notice to hear about the acquisition and what it will mean for Yancoal. We strongly believe Kestrel is a high quality and attractive acquisition that will deliver on Yancoal's value-adding growth aspirations and positions the business to deliver strong performance and shareholder returns in the future. We look forward to working closely with the current owners, EMR and Adaro, through the coming months to reach transaction completion. Kestrel is a well-run, high-quality mine with a strong team. We also look forward to welcoming the Kestrel team to Yancoal and working collaboratively with them, our new joint venture partner, Mitsui, as well as local stakeholders and communities. We see this acquisition as another great step forward for the business. The release of our first quarter production report is set for the twentieth of April. We'll have another opportunity to speak to you next week during the webcast for that report on the twenty-first. Thank you and have a great day. Thanks everyone for participating. Desmond, could you please conclude the call? Thank you. That concludes today's conference call. Thank you all for participating. You may now disconnect your lines.