Whitehaven Coal Ltd

ASX:WHC

Earnings Call Transcript 2022-Q1

[Operator]

Thank you for standing by, and welcome to the Whitehaven September Quarter 2021 Production Report. [Operator Instructions] I would now like to hand the conference over to Mr. Paul Flynn, MD and CEO. Please go ahead.

[Paul J. Flynn, MD, CEO & Director]

Good morning, everybody, and thanks very much for taking the time to dial in to the September Quarterly Production Report for Whitehaven Coal. I understand today's busy days, so I'm just going to hook straight into the report and move into the Q&A. So for us, first quarter for this new financial year off to a very solid start. I'll just quickly run through the highlights for you. September quarter, you can see run-of-mine coal at 5.2 production at the managed level, the managed saleable coal production at 4.7. In terms of coal sales -- managed coal sales at 4.6, managed own cost sales 4.2, the equity level at 3.9 and 3.4, respectively. A healthy stocks taking into the December quarter, which is a positive thing. We've had no cases of COVID in our business at all whatsoever, which is a fantastic thing to be able to continue to say to you and no change to guidance required. That segue into safety, safety numbers of 5.9. That's a solid result. And certainly, the trend is better moving into this year. Narrabri had a very good time and safety was in fact is first quarter with no recordable injuries. That's a very positive thing. And then Tarrawonga has had thousand days free of lost time injuries. In terms of COVID, as I mentioned, there are no cases for us, which is fabulous, and we have launched an incentive program to make sure our people are vaccinated. And that's moving well taken off through the site has been very good, but as the regions are lagging, the state average more generally. And so we are taking a cautious approach to how we moderate the various hygiene and distancing measures that we have in place. So that will probably last longer than what will apply for the year for the state average related measures.Over the page, just in terms of the tonnes there, you can see the total there at 5.2 versus 4.4 at the managed ROM level. The managed saleable, as you can see there, 4.7 versus 4.8. Sales produced coal 4.2 versus 5.6, 25% down difference from period-on-period. The managed coal sales -- purchased coal are borderline different, therefore, 420 versus 417. So pretty consistent there. However as I said before, we've got solid stocks moving into this December quarter. which, as you know, doesn't have change out at Narrabri, so that will be a positive thing. I'm sure everyone will be interested in the realizations table that we put in here and certainly an interesting picture that paints. I'll just go through some of the key metrics there for you. The average for the quarter for our thermal coal at $168, that's the index. Our realizations at $142 is 15% down. Consistent on what we mentioned previously with our guidance for year -- for this first 6 months. We will have mid-CV sales in the tune of that about 20% in the first 6 months, moving to essentially gC NEWC average in the second 6 months of the year. So that's consistent with that previous guidance. The JSM pricing for semi-soft at $149 in terms of our realizations of $134, so that's 10% down. The average semi-soft spot price at $174 is really there just for amusement value, I think given that we're not selling spot tonnes or the semi-soft market as a general rule. And in fact, the semi-soft prices have spiked quite a bit also at $287, but we're not seeing much physical demand behind that number. But it is obviously unshackled given that the prime low-vol hard coke price has now moved northward. Just over on the next page, in terms of sales, as far as I say, down on the previous quarter, but doing nicely and off to a solid start for our year. We do have a heavily weighted sales program for Narrabri being the point of difference, I suppose, in terms of period-on-period movements into the December quarter. So as you'll know, given the quarter we had previously, we brought little stocks into Narrabri in and that the quality of that stock was outside of the range we normally expect for Narrabri. So we hold off a little bit there, and there'll be further blending in sales and clear that out in this next quarter. So we don't expect to carry out that coal into the second half of the year. gC NEWC as you can see, $167, it was a 54% increase on the June quarter. So very strong underlying market that we're in. And whilst we do experience the lags, as we talked about, I'm sure the Q&A section will focus on that again. The lag is a lag, and you will get it. It's just a matter of the passage of time in that regard. So $142 average for us during that quarter. That's a pretty solid result. We provided some statistics here, of course. We've got sales which are priced at metrics preceding the period that we're in, and that's 57% of our thermal book does that. And then you've also got, as we mentioned, some mid-CV sales which are priced at levels below the 6,000 level and we've provided that metric for you again. Again, that's the first half phenomena in the second half of the year will be typified by gC NEWC average quality profile, which will be good to see. On to the mines -- sorry, met coal sales quite low as you would have imagined, and it's really just a point of reference. Despite that semi-soft price I quoted haven't been very high. We're not seeing much physical interest in that. And certainly, we're not chasing sales at all given the verbal pricing dynamic that we're experiencing. Maules has put its first foot forward into this new year in solid fashion. So little to see that in that regard, 2.94 versus 1.97. So that's a very good result there. We are signaling to you, of course, and I know many of you know this, we have a differential between how the 30 million tonnes per annum ROM limit is applied to us on a calendar basis versus the financial year formula that we're using. So there is a constraint in terms of what the December quarter will deliver, and that's the 2.6 that we quoted here for you. Stocks are solid there. So we've got good stocks to cover the period when Narrabri -- that Narrabri has good stocks as well for this impending change out period during this next quarter. So Maules Creek is off to a very good start in this year. Narrabri has had a very solid start to the year, and that's very pleasing to see with tonnes there are 1.5 versus 1.6 in the previous corresponding period. So that's been very positive for us. But we have said that our sales are weighted in the December quarter. And so you'll see that bounty, if you like to convert into cash in the next 3 months as we've got stocks here at 900,000 tonnes, which is up, but as I say, that's just indicative of the fact that there's -- we came into it with very little stocks as a result of that bumpy period through the preceding quarters. And so we've built stocks in sales will move over the next 3 months, clearing out all the remnants of that sub-SCOTA quality that we cut there. We're satisfied that we've got very little left on this panel to go, in fact, and we're satisfied that there's nothing else to observe structure-wise in the balance of the panel and certainly in 110A having done the geo-sensing drilling there and 110B will be done over in the ensuing months. Cut and Flit can start in that first quarter of calendar '22, so Q3 FY '22. And we have commenced the mains during this quarter as well for the 200 series, which is positive. The Gunnedah open cuts, not a lot to see here. They've had also a pretty decent start to the year. Tarrawonga is actually quite consistent with where we wanted it to be. Werris, our plan there in the first quarter was always going to be a little bit more dirt focused than coal focus, but both tonnes and sales have been in line with our plan, which is positive. So those numbers, I'll leave for everyone to digest, but nothing particularly exciting to see in either of those. As you know, we are washing a bit more coal at Tarrawonga in particular. And so as I say, in the second half of the year, you'll see a broader SCOTA average. That is important blend stock across our business that we want to use it. So there is a little bit more washing involved in this year, as we previously discussed. From the logistics perspective, this is just to note that we are now back at full capacity in terms of our ability to move tonnes through the logistics chain. That's very positive. There are also some queues there, of course with PCS, but that will be unwound. And as far as NCIG goes, we're back in the normal rhythm of our deliveries there. I'll scoot across the development projects because there's not a lot to identify here. Narrabri Stage 3 is in -- we are waiting on the whole government report there. And certainly, we're pushing hard to see that if they can convene an IPC here in this side of Christmas, which would be ideal for us timing-wise. We do have pretty more time available, but just to keep the ball rolling, we want to make sure that, that gets squeezed into the agenda here before Christmas. Vickery. Vickery, as you know, was approved by the Federal Minister, which is very positive. And so we're just continuing to do more work associated with that and waiting for the exploration of periods for appeals and otherwise to move on. Winchester South, the exhibition period has closed. And so just working with the government on that now, which is very good to see. No change in trajectory there on Winchester South. Over to the market. Look, the market is very strong, as you all know. So I'm sure that's going to be the topic of discussion for the Q&A. It's very tight across every customer jurisdiction that we're looking at. We're seeing some extraordinary prices in individual jurisdictions because of their physical constraints. We've got China thermal coal or look at the Indonesian coal prices that they're achieving. I mean those 2 are obviously heavily correlated. You've got the supply issues contextual with each jurisdiction that we look at, whether they be constraints in South Africa, you've got a fire in one of the ports in Russia. You've had flooding to overcome in Indonesia, adding some further tightness to an already tight market. And each of our customers economies are lifting, we are seeing customers asking for more tonnes to be brought forward. And certainly, the tendering action that we're seeing at the moment is very strong and bodes well for not just a very good balance of this financial year. But I think if everyone looks at the supply constraints and the demand lift overall, I think it points to a robust settings from a supply-demand perspective for the next couple of years. So look, it's a very good environment in which to be coal mining at the moment, despite various other commentaries around the place. So at the moment, our focus here is to continue to delever, put the balance sheet and the position that we were unable to do during the last 18 months due to COVID, but that is happening quickly, and these robust coal prices are accelerating the impact of that. So that's pretty much the quarter off to a good start for the first quarter of the year, very pleasing. Conscious of the need of people to move on to other things today. So with that, I want just hand back to the operator and get the Q&A started.

[Operator]

[Operator Instructions] Your first question comes from Rahul Anand with Morgan Stanley Australia.

[Rahul Anand, Equity Analyst]

Two quick ones from me. Look, first one is something that's been talked about before. But if we think about the port and logistics situation at the moment, it makes sense that Maules goes to about 2.6 million tonnes next quarter gives you a bit of time to draw down stocks. But -- should we start thinking about 16 million tonnes per annum approvals now rather than waiting for AHS? And perhaps what are some of the critical elements and hurdles that you need to jump from an approval perspective from the government? That's the first one.

[Paul J. Flynn, MD, CEO & Director]

Yes. Thanks, Rahul. Look, it would be nice to know -- to have the 16 that with this pricing backdrop, no doubt about it, but that is a significant approval modification for us and requires quite a bit of study, which we're doing as we speak on all the important aspects of increasing the intensity of mining there, so noise, dust, water, you name it. It's all -- it all requires a lot of work. So it's not something that's simply done as much as we'd like to do that. And of course, we've got -- we've got other things in the pipeline that both Narrabri Stage 3 and also Vickery as well, which our judgment was not to complicate the matter by asking for that at the time. It is, as you point out, in our view, the upside here is correlated with the success of AHS. And our view is that further and -- or further mechanical intensity in our pit would be -- runs the risk of being counterproductive. And so our view is that we need to extract in order to go bigger, we need to extract more out of the existing fleet numbers we have. So that's our preference. So there's no short-term unfortunately for you, Rahul, answer in the 16 million tonne. This is a couple of years work from here.

[Rahul Anand, Equity Analyst]

Okay. Perfect. Look, one quick follow-up on the logistics side. Obviously, the shipment delays that you had this quarter and you still have high stocks. Perhaps if you can remind us what is the normalized stock levels that we should look for? And then when do you think you can get there? Would third quarter of this fiscal be the appropriate time to start looking at those stocks to be drawn down given there's the maintenance coming up at PWCS as well?

[Paul J. Flynn, MD, CEO & Director]

Yes. For us, we certainly like to take our stocks down. It depends on how you look at product stocks, we don't like to be less than 1 million tonnes, so on the product side of things. ROM stocks we can cope with obviously quite a bit more than that. But with all that's said, we'd like to bring down at least 1 million tonnes out of this whole maybe 1.5 million out of the current position. Obviously, prices look very good, and let's convert that into cash. Now there's -- there's different contextual things here with Narrabri, there's obviously, the quality differentials. Fresh coal coming out of the pit now is really good for blending that poorer stuff up that we carried into the year up. So that's positive for us. Maules Creek is well sold. So we don't actually have a lot of blend stock available internally in the business as well. But we do have good stocks there, but we are producing at the same rate we're processing. And so -- which is a high-quality problem. So we are looking at initiatives to try and draw down further stocks from our ROM stocks during the next 6 to 9 months. And -- so that's certainly -- and we're talking about incremental capacity to crush and so on and screen. And so we look at those initiatives, we want to bring that down by, say, 1 million to 1.5 million and convert that obviously in the cash in this good pricing environment.

[Rahul Anand, Equity Analyst]

Okay. Final question perhaps for Kevin. Obviously, we've talked about in this quarterly that you're looking to pay down your debt and you may have that net cash position soon. Is it fair to assume that we've now defined for our mature business, perhaps for Whitehaven Coal current producing assets that your target net debt for that part of the business is solidly the net cash position and only on the growth scenarios are you going to take on incremental debt? And what kind of target that would you stretch to in that scenario?

[Kevin Ball, Chief Financial Officer]

Rahul, I think you've read the memo. See, I think the balance sheet is net cash. I think the only time we get into a net debt position is at the bottom of the cycle if things haven't gone terribly well. And by that, I mean, you'd have the -- not the revolver, you would have something like a leasing and ECA facilities that don't have any refinance risk. That would be where the net debt comes from. I think the -- we put a note in there that said we'd be up to 2x on a through-the-cycle basis. 2011 on a through-the-cycle basis, we look at the numbers and say, if you look at the EBITDA over the last 5 years, it's been about $3.3 billion, $3.4 billion. So that tells you that on a 5-year cycle, that's around -- that $600 million. So at worst, I think we would be 2x levered on a net debt basis through an acquisition. But I can't see us doing that to an expansion because of the cash that's generated in the business. So for me, that's the real outlier role. It's not something we're targeting, it's just saying what's the boundary limits.

[Operator]

Your next question comes from Paul Young with Goldman Sachs.

[Paul Young, Equity Analyst]

A couple of questions. First one on, I guess, the thermal market. I mean, the planets have completely aligned here and that the outlook is very positive on 3 to 4 months view, and you stated that in your report. Just curious about the fixed or the tenders from some of the Asian customer base at the moment, particularly Taiwan and Japan, for those reasonably large volumes. Can you just talk through how have you been able to capture in that, participate in that? And actually, have you been able to lock in any sort of fixed price, high-priced contracts for the next 12 months?

[Paul J. Flynn, MD, CEO & Director]

Yes. Look, we've had good activity right across all our markets. We're calling out obviously the Koreans and the Taiwanese because they've been obviously active for some time not just because we think they were short in this current year, but certainly now preparing themselves for the new year well and truly. So we have been able to -- we've got a lot multiple requests even from Japan to bring coal forward. So that's problematic, given that we are well sold. And as we said but we have been able to take advantage of some of these new sales in the new year for sure, and even some tactical ones in the next few months. The prices are pretty much indicative of what you're seeing in the forward curve when we've taken those tactical opportunities. But, yes, look at this, the price lag is the price lag. The lag will -- you will get the benefit of it. It doesn't disappear just through the passage of time. It just takes a little while longer to come to fruition in your bank balance, but it will come. So trying to lock in sales out into the new year is not easy. Our customers are very cautious at the moment. They also see the opportunity to take some time, hoping for a moderation. We're obviously hoping for the reverse. So we're actively discussing with customers who are sensitive to this and looking at opportunities to lock in sales based on the forward curve, which is obviously pretty good. So we're doing that, but I won't go so far as to quote prices and things, but they're certainly looking very positive. And we are minded to try to lock some in as we see this market flatten out.

[Paul Young, Equity Analyst]

Yes. Paul. I mean just further to that. So what percentage of sales can you contract on the forward curve and how far is the forward curve out now that liquidity wise that you can actually lock that away?

[Paul J. Flynn, MD, CEO & Director]

That's -- our focus on this rather than synthetically or doing it through derivatives is actually with the customers. So say, for instance, we've won some tonnes with some of our customers, which have an average price for next year, say for next calendar year. And those prices are looking very good relative to the realizations we're seeing today. So -- but that volume that we're doing that with -- they're in the 5 sort of percent level, and we'll try and increase our generally. Generally, our fixed prices, if you like, at an average is about 30% -- 30% that we go into a particular year in terms of -- on a running revolving basis, about 30% fixed. So we want to elevate that a little bit further. So there are opportunities to do that at this time. And obviously, that will be beneficial because all those costs that we're talking about are above the realizations we've just printed.

[Paul Young, Equity Analyst]

Okay. And a question for you, Kevin, on paying down the senior debt facility and where that leaves you on facilities made a fantastic outcome that you can retire that early. But just wondering now where does that leave you on available liquidity or facilities, I should say. Now are you looking to -- at another facility. And what form would that be?

[Kevin Ball, Chief Financial Officer]

Yes, Paul, that's the $1 billion facility that's there remains on foot until July 2023. So it's paid down and undrawn. We said at the full year that we have a look at the debt capital markets. As you'd be aware, I think the China property market has probably put the freighters under that at the moment. So I think we're waiting to see how that plays out. Pleasingly, when you look at the balance sheet being net cash second half takes all the pressure off that. And if you go to a market with a net cash position, you're actually going to be providing investment and investment grade credit metrics and an investment-grade balance sheet into what's probably a BB credit, so it should be supportive is really what I'm saying, so we'll be patient, we'll be there, and we'll get it done, but we want to wait for the right market.

[Paul Young, Equity Analyst]

I understand, Kevin. So just to confirm, that means that, that facility, which is not till July 23, you might be looking to replace that before that?

[Kevin Ball, Chief Financial Officer]

I think we'd look to replace it somewhere between now and the second half of '22, Paul. And I think the other side of that is we probably serve to reduce. I mean if we step into the market, we will reduce the existing revolver from a $1 billion facility, almost dollar for dollar on whatever we raise in another market.

[Operator]

Your next question comes from Peter O'Connor with Shaw and Partners.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Kevin, just following along with the debt thematic. So are you saying the U.S. bond markets are closed because of Evergrande and/or is it an ESG pushback or are they completely separate issues? And are you getting a welcome from the U.S. bond market despite you're a coal company?

[Kevin Ball, Chief Financial Officer]

Yes. Rocky, that's a really good question. My answer for you is that it's -- I don't think that the markets are closed. They're just not the place that you want to be in when you look at the current moment and say the business is rude health. So I think the ESG, our view here is that the Asian debt capital markets will provide the funding for Asian debt capital Asian resources for the decades to come. And that business, we expect that to grow and expand over the next decade. So that's really why we want to try and put a foot in that somewhere in the next -- in this next period.

[Paul J. Flynn, MD, CEO & Director]

Yes. But there's no doubt there's the current property market sort of influence on that market definitely is money, the waters a little bit.

[Kevin Ball, Chief Financial Officer]

It certainly has. I mean spreads in that BB, spreads in the U.S. market really haven't moved much, paul -- sorry, Rocky. And then the spreads in the BB market in Asia are probably up 200 basis points in 6 weeks.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Okay. So you've got time on your side, and you've got a market that will take your paper and rates are reasonable given that backdrop, Whenever you do that, for a coal company?

[Kevin Ball, Chief Financial Officer]

We're expecting it's going to be really reasonable and we're expecting to be well received there, Rocky?

[Peter O'Connor, Senior Analyst of Metals and Mining]

Great. And Paul, back to the premium discount. Congratulations on getting much better realizations. I took the conservative view and I thought you'd be a bit lagging so well done. The lag to the JSM quarterly benchmark price, that was 149 versus your booking 134 million. You mentioned you're not selling spot. So the differential between those 2 in the September quarter is what?

[Paul J. Flynn, MD, CEO & Director]

Oh, I don't have that number for you. I mean we -- our sales, as you can see, are very low on the met side of things. And the aggregate of that -- the aggregate of that is PCI and semi-soft, of course. And so the pricing structure that's associated with the PCI are different from that associated with the semi-soft. So you can pretty much halve that and see the impact of the JSM quarterly price on us. Obviously, on a look-back basis, you're going to see the next settlement look a lot better. And so it's -- that part of our business is relative to the current pricing is underwhelming. But with the Platts price at what $280 something...

[Peter O'Connor, Senior Analyst of Metals and Mining]

It's $287 in today.

[Paul J. Flynn, MD, CEO & Director]

$287. That looks quite incredible. But when we've gone in and have a look at that and just to see what substance sit behind that, it doesn't look like there's physical substance there of any size of duration. And I really think it's just unshackled, as I said earlier, because the PLV price is obviously another $120 higher. And so we're watching it very closely, but we're not chasing those sales, if you may. It's something -- If there were sales there for that sort of number, we would look at doing something. But otherwise, the thermal market is the better place for us with its premiums.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Paul, back to the comments about logistics. If I read your report correctly, it seems like you were mapping out delays at the port because of weather and the maintenance in the December quarter for PWCS, is that telling me there won't be the pull-through of working capital that you may have otherwise hoped for? Or is that just flagging a more cautious backdrop?

[Paul J. Flynn, MD, CEO & Director]

No, no, sorry. Our apologies if it led you to interpret that from the way we've written it. No, no, we've got no issue whatsoever getting coal through and converting that -- those stocks into cash, none at all. We're just observing that the physical dimensions of what's ahead and Rahul's already noted the PWCS outage. But no, that's not going to impede us in any way to convert this stock into cash.

[Kevin Ball, Chief Financial Officer]

The only thing I'd probably say to you though is have a think about this, if we have the same -- roughly the same tonnage, but we've got 4x the price, you're going to see a little movement in the debtors in working capital. But that's a 2-week exercise.

[Peter O'Connor, Senior Analyst of Metals and Mining]

Okay. And lastly, on Maules Creek JV partner sale, any comments, update, progress?

[Kevin Ball, Chief Financial Officer]

No, no change there at all. We're not sure whether that's up to, to tell you the truth, Peter. It's ongoing, but I'm not sure what the field looks like at all to tell you the truth.

[Operator]

Your next question comes from Glyn Lawcock with Barrenjoey.

[Glyn Lawcock, Mining Sector Analyst]

Look, just a little bit more in depth on the pricing, if we could. You sort of talked a little bit about you've got 65% high CV and 23% other. What do you actually classify as high CV? Is that anything above 6,000?

[Paul J. Flynn, MD, CEO & Director]

Yes. Anything that SCOTA spec. So if we're meeting the SCOTA the bottom end of that is actually 5850. So we're putting anything above that up to, obviously, 63 a little bit more, in our case, into that market.

[Glyn Lawcock, Mining Sector Analyst]

Okay. So I understand all the lags and everything. So what about the premiums you stopped disclosing the premiums you're getting from Maules unless I missed it in the report. Are you still getting the energy premiums, the ash premiums? And how are they because I guess it is a bit -- I can understand the 23%, I guess, that's what you say is getting the big discounts. So I'm just trying to understand how you're going on getting the premiums and when do we actually think we could see if the index goes sideways, how long do you think it would take for us to get back, if at all, to say where we were a year ago at getting the index?

[Paul J. Flynn, MD, CEO & Director]

Yes, yes. Look, in the second half of the year, we will be getting the index. So that's -- those mid CV sales will be out of our sales mix in the second half of the year. So, I'm answering the last bit first. Back up to the premium side of things. Yes, energy -- sorry, we haven't referenced that. Yes, you're right. But the energy premium benefits are certainly coming through. 5% so you should add that in there. And then the premiums and fills on top for the qualitative aspects of the coal, call that in the $4 and $6, maybe average $5 range.

[Glyn Lawcock, Mining Sector Analyst]

Okay. Yes. And then if I look at the met side of the business, I think you made a comment in your opening remarks, we're not selling coal on the semi-soft coking coal market. what were you meaning by that? You're not selling it just today or never?

[Paul J. Flynn, MD, CEO & Director]

In the spot market, we're not a spot seller of semi-soft. And of course, up until very recently, that spot market has been a lot less than the thermal coal price. So we're not generally, we've not been doing that for some years now, as we've talked about, that the semi-soft demand has been relatively weak. So we haven't been chasing that. So my reference to that earlier on was really just to say that, just to say that, I know that the spot semi-soft price is high now. That's only a recent development. We've looked behind it. There is a lot of physical substance to it. And whilst that's the case, we're not chasing incremental semi-soft sales. The better economic answer is to continue to deliver the high-quality thermal with its premiums.

[Glyn Lawcock, Mining Sector Analyst]

So telling us what the semi-soft index is, what's the benefit if we don't sell against it, -- Like because at the moment, it just made it look pretty bad getting 25% discount to it when it doesn't sound like it actually references anything in your business.

[Paul J. Flynn, MD, CEO & Director]

That's right. It's just for information purposes only. As I say, that's why I noted that we're actually not selling relative to it. But people ask us what it is.

[Glyn Lawcock, Mining Sector Analyst]

Okay. I might take that offline a bit more. And then just my final question, thanks, just with the projects, obviously, the backdrop is very good at the moment. But how do you think about the timing of it now? I mean are you feeling compelled to push ahead? Or are you actually feeling now you should just wait? Just wondering how your view has changed over the last few months.

[Paul J. Flynn, MD, CEO & Director]

Yes. Look, our views haven't changed over the last few months in this regard. Obviously, that the market is very tight. So our focus is as you know, Glyn, to get the balance sheet work done. That work is much delayed given the last 18 months that we've had. So we want to get that work done. We've only just recently brought on -- well, we only just recently received the federal government EPBC approval for the enlarged Vickery project. There is obviously the -- that's not the answer, obviously, that the naysayers wanted. And so there's -- we're aware of some movement in that regard to question the minister's approval in that sense. So in the meantime, we're -- we're continuing to look at the projects both from a planning perspective, from a capital perspective and an OpEx perspective. So we've said that we're unlikely to take that project to FID within the 18 months -- with 18 months' time, and that remains true.

[Glyn Lawcock, Mining Sector Analyst]

Is that 18 months from when? It sounds like you made that comment in the last 6 months while I've been away.

[Paul J. Flynn, MD, CEO & Director]

Back in June. Yes. With a half year -- it was the full year numbers, sorry.

[Glyn Lawcock, Mining Sector Analyst]

Okay. And would anything change your mind, i.e., a customer coming forward and offering to buy equity in the project and offtake. Would that accelerate your view? Or as you can't accelerate it more than 18 months regardless?

[Paul J. Flynn, MD, CEO & Director]

I think 18 months is pretty much fixed in our thinking around this. So if someone turned up and said we'd like to have -- well, firstly, I mean someone turning up with legal shenanigans going on, that's unlikely. And so -- but the 18 months in our mind in terms of getting the company ready for that and the various planning scenarios that go with that, moving back into construction phase, getting the workforce mobilized. That will take some time.

[Operator]

Your next question comes from Stuart Howe with Bell Potter Securities.

[Stuart Howe, Research Analyst]

Paul, you just touched on it then around the Vickery project. And I'm just wondering around the sell-down process. I know it was a process that sort of slowed up there more recently. But is that ongoing? And I guess given recent markets, is it potential that you look at selling more than just a minority stake in that, that could become part of a bigger divesting process?

[Paul J. Flynn, MD, CEO & Director]

Yes. Thanks, Stuart. Look, we haven't been actively discussing this, to tell you the truth with potential buyers. The whole COVID period over the last 18 months has been certainly when we've had discussions with potential players in this field, they've told us that they're distracted with other things understandably. So it hasn't been a point of focus for them. And we've just kept it alive and kept them informed as to what's going on with the various approvals related developments. And obviously, we welcome the federal approval, but we just -- we'll get ourselves past the time of the appeals process before we re-enliven those discussions. Now the backdrop for those discussions have also been awkward, obviously, with COP26 at the back end of this month and various countries making statements around whatever they may or may not aspire to do over the next 30 years. But -- so we've played a cool on that, and we'll get past this hurdle and then move on to see which of these players are actually real or not.

[Stuart Howe, Research Analyst]

Fair enough. And then just regarding your comments around net cash by March quarter, and I realize we're almost there, but I'm just wondering what sort of price assumptions you've assumed moving forward for that expectation? Is it following a forward curve? Or is it price to stay where they are? And then more broadly, on the thermal coal market. It seems that a few of the things that have caused it to be so strong, the supply interruptions in places like Indonesia or building inventories ahead of winter, they're rather seasonal or temporary in nature. So I just -- is this as good as we get for thermal coal markets? I'm just interested in your comments around that.

[Paul J. Flynn, MD, CEO & Director]

Yes. Sure the targets that we've given -- our prediction was sort of end of March, April, that wasn't off the forward curve. That was off our own internal estimates. The forward pricing, if you apply that today, we'll see that accelerate which is a good thing. So we think it will come forward, which is nice to be able to say that. You're right. There are a few short-term influences on the supply side in a couple of different jurisdictions. I'm told that the flood impact in Indonesia is looking better, and that's -- and their internal redirection of sale to satisfy the internal needs, I'm told that's also been taken care of. So I don't expect too much extra tension coming out of there. But obviously, the floods in China have caused some issues and Indonesia's ability to try and meet some of that demand to try and fill some of that void, is relatively constrained from what I'm told. So that's -- So that's going to keep things tight. I mean the fire I'm sure you've all seen the reports on in terms of Southeastern Port in Russia, which supplies into Korea and Taiwan. That's a relatively modest cycle, but all these things add up. I mean that port probably puts through the 20 million to 25 million tonnes per annum. So they do add up, but that will be -- that will take some at least a month, maybe a couple of months to sort themselves out there. And of course, winter is coming and Russian coal is not much used during winter for some jurisdictions in any event. So yes, it's just promoting more tightness as you're pointing to.

[Stuart Howe, Research Analyst]

I guess on the demand side, a restocking event can feel like it's much stronger than what the underlying market is? What are your thoughts around that?

[Paul J. Flynn, MD, CEO & Director]

Well, I think if you look at each of these economies, they're all trying to step out of the quagmire that the COVID created and government stimulus is obviously the main tool that's driving that. And so I think it's not just restocking. It's actually re-enlivening economies. So restocking is just a short-term thing generally. But the ongoing stimulus that seems to be present in the market in each of the economies that we deal with and broadly the economies across the world because you can see energy, energy all over the world. It's just obviously in high demand as people trying to re-enliven their economies. That's going to continue on for some time.

[Operator]

Your next question comes from Alex Ren with Credit Suisse.

[Alex Ren, Equities Research Analyst]

Congrats on another solid quarter. So I guess, I've got a couple of questions. The first one is like your posted results, there was about $180 million roughly free cash flow generated over the first 8 weeks. So I was sort of looking forward or similar disclosure at the quarterly. But yes, could you give us some -- provide some color on the level of free cash flow you're generating these days, say in the September month.

[Kevin Ball, Chief Financial Officer]

Alex, that's a pretty easy question to answer because we started the year with $809 million in debt. We expect to be net cash in about 8 months in. So -- the short answer is we're punching out about over the first 6 months, about $100 million a month. That -- if that coal price stays where it currently is, that number gets a little bit bigger through that -- this period from December through to about March. So it's a pretty good period to be in.

[Alex Ren, Equities Research Analyst]

Yes. Great. And also the follow-up is like how do we think about working capital movements? Correct me if I'm wrong, you got prices still going up and hopefully can go up a bit higher and -- but there's also a decent level of inventories slowdown. So is that reasonable for us to assume a healthy working capital unwind over the next 6 months?

[Kevin Ball, Chief Financial Officer]

Yes, Alex, this is really -- this is -- you have to get into the detail here, and I'm going to bore a few people, but bear with me. We're paying creditors and we're paying suppliers on the same basis. That doesn't change, right? We've got stocks which are costed roughly the same cost, that cost isn't going to change other than for volume changes. The real question there is we're now selling coal compared to fiscal year '21. We're now selling coal at that $200-something mark. And so our receivables for the same volume of tonnes trapped in a receivable, the number is going to be higher. But as I said earlier, that's typically a 2-week issue because it's our payment terms on thermal coal are really short. Our payment terms on met coal are a little bit longer, but there's not that big volume in the met coal there. So I'd be thinking we're going to have a build in receivables, but I wouldn't be losing -- I'm not losing too much sleep on it because I know I get it in 14 days. Make sense?

[Alex Ren, Equities Research Analyst]

Yes, yes. And lastly, I suppose just a question on general market dynamics. Recently, many countries including India have been reporting coal shortage. What would be the impact of this to price, particularly India, are you seeing them actively seeking more imports?

[Paul J. Flynn, MD, CEO & Director]

I think we're all doing the same things at the moment. I think that's the challenge of it, Alex, at the moment. Everybody is doing the same thing. They're all short. They all need more. But again, this comes back to this broader issue about the whole energy complex is in the same boat in that regard. And everybody wants more as they're all trying to lift. And so I think this is going to go on for a while. And there's a lot of supply response. I mean, that's the biggest -- that's the biggest feature of this, the abruptness of this correction in this particular cycle, I think, is the fact that between this one and the last, there wasn't a material supply response. And so that's -- that's made the corrections here, if you like. The movements more aggressive as a result of just not having the additional supply being brought on from the last point of cycle. So that's a positive thing obviously, for current pricing.

[Operator]

We have reached our allocated time for questions. I will now hand back to Mr. Flynn for closing remarks.

[Paul J. Flynn, MD, CEO & Director]

Thank you, everyone, for your time today, really appreciate I know that it's a busy day. So if there's any questions left over people were to find us, myself, Kevin or Sarah. Ian was on the call as well. He didn't get a question, so he's feeling a little bit left out but if there's anything operational people want to chat about and then just come through the normal channels. Look forward to seeing you all. Thank you.