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Whitehaven Coal (WHC) 20.10.2020

 

This is not a recommendation or proposal to do anything. The data written in this article is not guarranteed. It is my private personal opinion. I own a position of Whitehaven Coal shares that`s why I`m not independing.  

Whitehaven operates 3 coal mines in New South Wales and Queensland Australia. 

Acc. to (4) the coal price decreased to 51$/ton. That means the coal mines of WHC that claim costs of 54 USD/ton is not profitable at the moment! WHC has stopped the key development projects and is potentially reducing its capex to the minimum required.  

IF WHC will survive it becomes very profitable again. The share price might x-fold. 

A risk for WHC are shareholder resolutions against the business purpose of the company by green minded institutional investors betraying their clients. The last ones got 40% of the vote and thus might intimidate the management see below. 

 

Production

Mine                              Annual Prod.            Comment     

Total Production            Mt 20.0 - 22.0 Production weighted to second half (H2 ~60%)

Maules Creek                Mt 10.0 - 11.0 Skilled labour shortages and drought impacts

Narrabri                       Mt 6.0 - 6.5 Longwall changeout in the December 2019 quarter

Gunnedah Open Cuts    Mt 4.0 - 4.5

Cost of Coal (excluding Royalties) $/t  49 USD/to 

 

Growth

Maules Creek            13Mtpa ROM  >35 years • Mine ramping up to 16Mtpa ROM with the roll out of AHS, commencement of in-pit dumping and 16Mtpa modification application

Narrabri Stage 3        11Mtpa ROM >25 years • Extends mine life to 2045 

Tarrawonga               3.0Mtpa ROM ~10 years • Ramp up production to 3.0Mtpa ROM

Vickery Seeking       10Mtpa  ROM >20 years • Open pit metallurgical and thermal coal production • On site coal handling preparation plant • Rail from site. Approved with 4.5mio tons/yr

Winchester South ~ 15Mtpa ROM >25 years • Whitehaven’s expansion into the Bowen Basin • Open pit metallurgical and thermal coal production, 

 

WHC fiscal year is from July 1st - June 30th 

Share Price 26.08.2020: 1.02 AUD/share 

Exchange Rate 26.08.2020:  1 AUD = 0.72 US$   

                                       FY 19        FY 20 1/2    FY 20

Revenues (mio. USD):       1660          590           1239

Unit costs/USD ton:           44.7          51             54    

Net Debt (mio. USD):        107           423            567

Dividend (c):                     20            1.5

Net Profit (mio. USD):       351           19               21

Profit/share (c):                35            1.9              2.1

Markable Reserves in mio. t:    844                              826

Measured+Ind. Resources mio. t:                                        2994

Production mio ton:            23,  19.5% met         16.6 

 

Number of Shares: 1,026,045,885 Outstanding: 1003,004,000      

Metalurgical coal price is usually 40 - 60% higher than thermal coal.  

Customers in  1000 AUD 2019/2018 Comparison Revenue by geographic location 

                               2020          2019               2018

Japan                      844,007     1,255,751         1,168,965  

Taiwan                    256,089      262,015             302,279  

Korea                     231,217      351,328             252,039  

India                      134,814      201,637             128,540

China                       28,507      66,541               87,184  

Malaysia                   51,346     100,267             63,352  

Indonesia                 26,593     48,755               60,410  

Vietnam                 67,861                                47,323  

Philippines              37,786       35,933               30,836  

......

Total revenue         1,721,609   2,487,944        2,257,446 

 Au$225.9 million paid 2019 to the NSW Government in mining royalties and a further $97.9 million paid in a range of taxes to state and federal governments;

Tax Situation: 

Australien verzichtet auf die Erhebung der Quellensteuer, sofern die Dividenden aus Gewinnen bezahlt werden, die bei der australischen Gesellschaft voll besteuert worden sind (franked dividends) oder es sich um die Ausschüttung von so genanntem „conduit foreign income“ handelt. Andere Dividenden werden weiterhin mit 30 % besteuert, wobei die Quellensteuer aufgrund des DBA, je nachdem, auf 15 %, 5 % oder 0 % herabgesetzt wird. 

Some News

2020/10/20 “In China, the arbitrage between domestic and import prices remain above $US25 ($35) per tonne, supporting the demand for imported coal and it is unclear if China will relax its custom clearance times and allow for further imports" (6). I assume that China limited imports to support its own coal industry.  

2020/10/15 Whitehaven Coal has paused three key development projects, including the Narrabri and Vickery extension projects in New South Wales and the Winchester South metallurgical coal project in Queensland(6). 

2020/10/12 China bans Australian coal imports as relations sour. China has suspended purchases of Australian coal. Chinese power stations and steel mills have been verbally told to immediately stop using Australian coal, and ports also have been told not to offload Australian coal, according to the report (5).

2020 05 The New South Wales Government has given Whitehaven Coal the all-clear to extend the Vickery coal mine in New South Wales (2).

Climate Related Shareholder Resolutions Sept. 03.2020

Someone would expect that investors holding shares of coal mines, oil companies believe in a modern future based on such energies. Someone who believe in acid rain, "climate change" or other green dogma will not buy or have such shares. In the 70ies green NGO bought a few shares of nuclear operators and forwarded petitions that were regularly very clearly rejected. 

Today there is the phenomen that shareholders of energy companies forward shareholder petitions against the business purpose of the company in favor of the green dogma of "climate change". These petitions getting more and more and getting more and more votes. 

I assume that these petitions and votes are usually supported by institutional investors. That means investor that invest other poeples money. The managers of these funds are proud of their green believe. Instead of living acc. to their dogma avoid motor vehicles, ac, heating, electricity, air travel, computers, they live their believe on the costs of their customers. Many of the final beneficiaries of pension funds don`t have a choice others most probably does not know what these managers are doing with their money. According to my opinion it is betrayal of the customers. 

https://www.abc.net.au/news/2020-08-13/shareholder-fossil-fuel-resolution-whitehaven-coal/12546830

 

 

 

 

Some References

7. Oct. 20, 2020 https://www.australianmining.com.au/news/yancoal-scales-back-spending-to-weather-unpredictable-coal-storm/

6, Oct. 15, 20https://www.australianmining.com.au/news/yancoal-scales-back-spending-to-weather-unpredictable-coal-storm/20 https://www.australianmining.com.au/news/whitehaven-to-delay-key-projects-amid-coal-slump/

5. Oct. 12, 2020  https://seekingalpha.com/news/3621421-china-bans-australian-coal-imports-relations-sour-bloomberg?utm_medium=email&utm_source=seeking_alpha&mail_subject=rio-china-bans-australian-coal-imports-as-relations-sour-bloomberg&utm_campaign=rta-stock-news&utm_content=link-3

4. Aug. 3rd, 2020 http://marketbeat.com/URL/?URL=https://www.afr.com/companies/mining/glencore-to-cut-australian-coal-production-20200802-p55hot

3. July 14, 2020 https://www.australianmining.com.au/news/whitehaven-optimises-nsw-operations-amid-global-slowdown/

2. May 21st 2020 https://www.australianmining.com.au/news/whitehaven-clears-vickery-expansion-hurdle/

1. April 2nd 2020 http://marketbeat.com/URL/?URL=https://steelguru.com/coal/glencore-and-tohoku-settle-thermal-coal-price/557765

 

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