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Whitehaven Coal Limited : Annual Report 2013
75 Whitehaven Coal Limited Annual Report 2013 Vickery Ownership: Whitehaven 100% Following the acquisition of Coalworks, completed in August 2012, and the subsequent acquisition of Itochu Corporation's interest in the Vickery South coal project, Whitehaven owns 100% of the Vickery South coal project along with the Vickery project. At some point in the future Whitehaven could consider the potential of introducing joint venture partners to the project similar the Narrabri and Maules Creek joint venture arrangements. The enlarged project area presents Whitehaven with the opportunity to combine the Vickery project and the Vickery South coal project into one large project, subject to relevant approvals processes. The combined Resource for both project areas is 507.6Mt (148.1Mt Measured, 183.5Mt Indicated and 176.0Mt Inferred). The Marketable Reserve for the consolidated Vickery project is 180.0Mt (all of which is Probable Category). Initial mine planning on the Vickery project has generated an open cut design which produces 164Mt of ROM coal at a stripping ratio of 10:1. Vickery could produce about 4.5Mtpa ROM for more than 30 years at an average strip ratio of approximately 10:1. Another key advantage for the project is the potential to use the Gunnedah CHPP for washing coal. This would signi cantly reduce the capital investment required for the mine. Products would be similar to Maules Creek as the same coal seams are being mined at Vickery and include a semi soft coking coal and thermal coal. The Vickery Project Preliminary Environmental Assessment was lodged with the NSW Department of Planning and Infrastructure (DP&I) in November 2011 and the Environmental Impact Statement was placed on public display from 5 March 2013 to 12 April 2013. Whitehaven has reviewed the submissions made during the exhibition period and issued a Response to Submissions to the DP&I. A number of additional submissions were made after the formal close of the exhibition period leading Whitehaven to prepare and submit an additional Response to Submissions on 17 July 2013. The current timetable would indicate a determination is likely in the rst quarter of CY2014. Other Projects Whitehaven has interests in a number of other coal exploration projects, including Ferndale, Dingo, Sienna, Monto, Ashford and Oaklands North. Spending in FY2013 has been incurred on exploration drilling to maintain the assets in good standing with Government authorities and is expected to be similar in FY2014. Infrastructure Whitehaven currently uses both the Port Waratah Coal Services (PWCS) coal terminal and the NCIG coal terminal at the port of Newcastle, NSW to load its coal for export to the Asian region. Both of these coal terminals are world class facilities and are used by many other coal producers in the Hunter valley and surrounding coal basins. Whitehaven has an equity interest in NCIG that entitles the Company to about 6.0Mtpa capacity at the port when it is operating at its full capacity of 66Mtpa. The NCIG terminal completed its nal 2F expansion in June 2013 which has lifted its throughput capacity to 66Mtpa. The Company currently has a rolling ten year contract with PWCS that provides the Company with 5.3Mtpa until CY2015. From CY2015 Whitehaven rolling ten year contracted volume at PWCS increases to 12.8Mtpa. In addition, Whitehaven had acquired a total of 16.4Mt of port allocation spread between May 2012 and June 2016. These tonnes were to be used for the production from the new Narrabri and Maules Creek mines in the Gunnedah Basin. However due to delays in the approval process for both of the mines the Company had excess port allocation in FY2013 and expects to have excess allocation in FY2014. The cost of take or pay obligations in FY2013 caused an increase in production costs across the Company of about $3/t on an FOB basis. Recent reduction in port costs at both PWCS and NCIG are likely to save Whitehaven about $16 million in take or pay costs in FY2014 representing about $8 million saving at each port. Rail haulage contracts are currently in place for a total of 9.5Mtpa and Whitehaven has entered into a long-term haulage contract with Aurizon for a total of up to 16Mtpa to be increased in line with requirements as projects come on stream. A trial to test 30 tonne axle load locomotives on the Gunnedah rail line commenced on 1 August 2013. Initial results of the trial are positive and it is envisaged that full 30 tonne axle load operations will commence in 2015 and train sizes will increase from 6,300 tonnes to about 8,000 tonnes resulting in a cost reduction on a $/t basis for coal hauled in those larger trains. Below rail contracts with ARTC are in place to match the port and rail haulage contracts. Directors' Report
Annual Report 2012