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Whitehaven Coal Limited : Annual Report 2013
70 Whitehaven Coal Limited Annual Report 2013 Development Risks There is a risk that circumstances (including unforeseen circumstances) may cause a delay to project development, exploration milestones or other operating factors, resulting in the receipt of revenue at a later date than expected. Additionally, the construction of new projects/expansion by the Company may exceed the currently envisaged timeframe or cost for a variety of reasons outside of the control of the Company. In relation to the construction of the Maules Creek project, the currently envisaged timeframe or cost may be exceeded for a variety of reasons outside of the control of Whitehaven. These may include delays in the construction of mine infrastructure. The contractual terms for the procurement and delivery of various components necessary for the planned development of Maules Creek are yet to be established. There are many milestones which need to be met in a timely fashion for production to commence and there is a risk that circumstances (including unforeseen circumstances) may cause delay, resulting in the receipt of revenue at a later date than expected. Financing Risks Whitehaven believes it has su cient undrawn credit from its existing debt facilities to meet its capital expenditure commitments for the development of Maules Creek based upon its existing development timeline and expected generation of coal sales at the beginning of CY2015. If the Maules Creek development timeline is extended due to circumstances beyond Whitehaven's control then additional funding alternatives may need to be explored depending on operating cash ows from its existing mines and the ability to defer development capital expenditure on the project. Geology Risks Resource and Reserve estimates are stated to the JORC Code and are expressions of judgement based on knowledge, experience and industry practice. There are risks associated with such estimates, including that coal mined may be of a di erent quality, tonnage or Strip Ratio from those in the estimates. Market Risks The Company's future nancial performance will be impacted by future coal prices and foreign exchange rates. The factors which a ect coal prices and demand include the outcome of future sales contract negotiations, general economic activity, industrial production levels, changes in foreign exchange rates, changes in energy demand and demand for steel, changes in the supply of seaborne coal, changes in international freight rates or other transportation infrastructure and costs, the cost of other commodities and substitutes for coal, market changes in coal quality requirements and government regulation which restricts the use of coal, imposes taxation on the resources industry or otherwise a ects the likely volume of sales or pricing of coal. Sales made under export contracts are denominated in US dollars. The Company uses forward exchange contracts (FECs) to hedge some of its currency risk in line with its hedging policy. Financial Performance Gross revenue generated for FY2013 was $622.2 million, up 0.7% on the previous year. Sales were impacted by falling world coal prices for both thermal and metallurgical coal. Net loss after tax was $82.2 million for FY2013 compared to the previous year of a net pro t after tax of $62.5 million. Whitehaven's balance sheet remains strong. Cash on hand at FY2013 year-end was $110.5 million available with net debt of $471.6 million compared to $513.6 million cash on hand and net cash of $24.2 million at 30 June 2012. Cash out ow from operations was $16.2 million for the year compared to a cash in ow of $2.5 million for FY2012 as a result of general working capital movements. Existing unutilised debt facilities at FY2013 year end are su cient to meet Maules Creek capital expenditure commitments based upon the projected mine development timeline which has coal sales being generated from rst quarter CY2015. 5. OPERATING AND FINANCIAL REVIEW CONTINUED Risk Factors (continued) Directors' Report
Annual Report 2012