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Whitehaven Coal Limited : Annual Report 2013
74 Whitehaven Coal Limited Annual Report 2013 High moisture in the thermal coal product produced by the CHPP during FY2013 reduced the energy level in the coal and resulted in an achieved sales price below the Newcastle benchmark price. However in early FY2014, following the startup of the by-pass circuit, which e ectively places crushed ROM coal directly onto the product stockpiles, a blended coal product has been produced at the mine. The thermal coal product consists of a mix of by-pass coal and washed thermal coal from the CHPP. The blended product meets the Newcastle benchmark speci cations enabling the thermal coal produced at Narrabri to achieve Newcastle benchmark prices in the future. It is anticipated through further test work to re ne the blend by using less by-pass coal in the thermal coal product that more PCI coal can be produced from the mine in the future. This outcome will be positive for both margins and the pro tability of the mine. Several customers have already provided indications that they would like to purchase more PCI coal from the mine in the future. Narrabri mine (Equity Share) Narrabri mine -- 000t 2013 2012 Movement ROM Coal Production 2,575 254 +915% Saleable Coal Production 2,426 270 +799% Sales of Produced Coal 2,330 261 +794% Sales of Purchased Coal -- -- -- Total Coal Sales 2,330 261 +794% Coal Stocks at Period End 139 18 +660% Development Projects Maules Creek Ownership: Whitehaven 75% and Operator; ICRA MC Pty Ltd (an entity associated with Itochu Corporation) 15%; J-Power Australia Pty Ltd 10%. The Maules Creek Coal project located in the Gunnedah Basin is a large open cut mining operation with an expected life of over 30 years. ROM coal production rate will be about 13Mtpa. The products from the mine will include a semi soft coking coal and premium low ash thermal coal. NSW Government approval was granted on 25 October 2012 with Federal Government conditional approval granted on 11 February 2013. This was followed with a nal approval of approval conditions to allow for construction to commence by the Federal Government on 4 July 2013. Subsequent to balance date, a group represented by the taxpayer funded Environmental Defenders O ce commenced proceedings in the Federal Court against the Federal Minister for the Environment and the Company challenging the validity of the approval granted by the Federal Minister for the Company's Maules Creek project. The Application led with the Federal Court contends that the Minister committed errors of law in granting the approval on 11 February 2013. In this litigation, the Federal Court has jurisdiction to determine whether the Federal Minister committed an error of law in granting the approval. A hearing date has been scheduled for mid September 2013 and is expected to take three days. The judgement is likely to be handed down about a month after the hearing. Capital expenditure to rst coal remains as advised at approximately $767 million (100% basis) with about $170 million already spent. The remaining $597 million will be incurred over the next one to two years with Whitehaven's share 75% of the total. The project is fully funded with the re nancing conducted in December 2012. Maules Creek is expected to have average whole of life FOB cash operating costs of approximately A$67/t (excluding royalties) which is a very competitive operating cost structure, largely driven by Maules Creek's relatively low overburden stripping ratio of 6.4 bcm per tonne of ROM coal. The low FOB cash cost, combined with a low development capital cost per annual tonne of capacity and the high value of the saleable coal, con rms the strong economics and substantial value of this project. Existing unutilised debt facilities at 30 June 2013 are expected to be su cient to meet Maules Creek capital expenditure commitments based upon the projected mine development timeline. However, nal timing will be dependent upon the start-up of construction. 5. OPERATING AND FINANCIAL REVIEW CONTINUED Directors' Report
Annual Report 2012