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Whitehaven Coal Limited : Annual Report 2013
76 Whitehaven Coal Limited Annual Report 2013 Corporate Whitehaven is committed to improving e ciencies through the Stage 2 Operational Review with a key focus on reducing mine operating costs, overheads and extracting operational e ciencies in the face of continuing low coal prices and the high Australian dollar. As part of Stage 2 of the operations review, the Company will undertake a restructure to move its nance and administration to a shared service function over coming months to improve process and streamline e ciency. The Group integration of Whitehaven, Aston and Boardwalk remains on track to realise the synergies as outlined in the Scheme Booklet at the time of the merger. The Company has recently implemented a group procurement function to target reductions in costs in key areas of expenditure including tyres, fuel, explosives, electricity, road haulage services and corporate costs. Longer-term synergies continue to be expected from extensive coal blending opportunities and integrated rail and port infrastructure synergies once Maules Creek is in operation. The acquisition of Boardwalk and Aston by Whitehaven also resulted in a step-up in the tax base of those companies' assets, generating tax synergies. Whitehaven had cash on hand at 30 June 2013 of $110.5 million and had drawn $445 million from its bank facility of $1.2 billion. The facility has a four year tenor and provides lines of credit comprising $1.0 billion revolving and term, and $0.2 billion guarantee facilities. No debt serviceability covenant is required to be tested until 31 December 2014. Whitehaven had a total of approximately US$67.5 million in forward US$/A$ exchange contracts at the end of June, at an average exchange rate of AUD 1.00 = US$ 0.9725. Carbon Pricing Mechanism The Federal Government's Carbon Pricing Mechanism commenced from 1 July 2012. Whitehaven has conducted analysis of the CO2 emissions at each of its operating open cut mines, which has been independently reviewed, and determined from gas measurement that none of the mines meet the facility threshold to be liable to pay any carbon tax. The Narrabri underground mine which drains CO2 gas from the mine prior to mining is liable and paid carbon tax of about $1.77 per tonne of saleable coal from that operation. Outlook and Likely Developments Whitehaven's longer-term aim is to become the premier independent coal company listed in Australia. The process commenced with the successful development of the Narrabri underground coal mine and will continue with its production ramp up to full production during FY2014. Gaining all of the Government approvals required for the Maules Creek project will see construction of this tier 1 mine commence and advance during FY2014. When completed and operating the mine will enable Whitehaven to more than double its production from current level. The low cost production will ensure that Whitehaven remains one of the lowest cost producers in Australia. 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. While the Company does not expect an improvement in coal prices in the short-term, the weaker Australian dollar will help to increase revenues in FY2014. In addition recent cost cutting across all of the mines will leave Whitehaven well placed to cope with the current market environment. Whitehaven expects to produce and sell approximately 11Mt (100% basis) of coal in FY2014. 5. OPERATING AND FINANCIAL REVIEW CONTINUED Directors' Report
Annual Report 2012