Whitehaven Coal Ltd

ASX:WHC

Earnings Call Transcript 2022-Q2

[Operator]

Thank you for standing by, and welcome to the Whitehaven Coal December Quarter Production Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Paul Flynn, Managing Director and CEO. Please go ahead, Paul.

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

Good morning, everybody, and thank you very much for taking the time to join us today for the December 2021 quarterly report. I'll go through the highlights as usual, and go through our document, and then we'll get to the Q&A as soon as we can. Certainly, I'll just run through these highlights. So certainly, the backdrop of all of this is obviously a very strong price environment. So we've put there for you the average achieved coal price for the period of $211, which is very excellent obviously compared to not just previous years, but even a step up on the last quarter as well. December quarter, we managed ROM production of 3.2 million tonnes. December quarter managed saleable coal production just under that 3 million tonnes. Our total managed sales of 4 million tonnes for the period and our own portion of that at 3.5 million tonnes. And when you break that down to our own cost sales of equity level, we're at 2.9 million tonnes. Stock is at 2.1 million tonnes are reasonable, down from about 3.2 million. I think last quarter have been drawing some of that. Cash generation has been very good, and I'm sure we'll get to that in the Q&A. We are still on track to be net debt -- or net cash position in March of '22. Longwall transition was actually completed on time, which is very good, 109 to 110, and I'm sure we'll talk about a little bit later on, but that's very positive. But the quarter has seen 2 externalities, which is driving our business to some degree. We've obviously had very wet weather across the state, which everybody has been reported on the media, then Gunnedah Basin got a hell of a lot of that, perhaps disproportionately so. So that has caused production to slide to the right, which we'll talk about in a minute. And then, of course, having not been exposed to COVID cases for nearly 2 years, Omicron obviously, is teaching us how to deal with that to some degree. And I'll talk about that and its effect on our business through this discussion. Now as far as guidance, we'll get to that later, and we have updated our guidance based on both the weather and the COVID impacts. From a safety perspective, our TRIFR has gone up to 6.1 during this period, and that's a little higher than what we'd like. We're pleasingly, the severity of the instances that we are having is lower. But in total number, that's not where we want to be. So there's definitely some work to do on that on an industry basis, we're doing -- we compare very well, but that's not really the standard we hold ourselves to. A brief discussion then over the page just in terms of ROM production, sales and stock volumes. I'll just touch on this weather, so I can give everybody a bit of a sizing impact of that. We have been receiving significant above-average weather rainfall, and that did culminate in floods in the area. I'm sure which many of you who watch the news would have seen in our area. And in fact, at Maules Creek and partially at Gunnedah CHPP and also Tarrawonga. But for Maules Creek in particular, we lost access there for a good 2 weeks, and so it did evacuate people out of site, used helicopters to bring essential service people back into the site to maintain all our environmental monitoring and safety-related regime during that period. But as a result of not being on site, and so when you know you're not on site, you're obviously clearly not processing, washing, stacking and certainly not loading trades during that period. About 600,000 to 700,000 tonnes have slid to the right for Maules Creek. And in the case of Gunnedah, principally Tarrawonga, the effect of that is about 100,000 to 200,000 tonnes being deferred. Now COVID still, as I've mentioned, we haven't been touched by COVID cases for nearly 2 years, which has been tremendous, but that's changed now. And during December, we certainly had started to see the impact of that in the number of people self-isolating. And there are associated impacts with that not being able to have the full complement of manning that we need, man all the equipment on the day. And the impact of that is about 200,000 tonnes in the quarter. I'll get to the guidance update for you in a minute. The tables there, as you normally see from us, I won't go through the top line given I just said that at the outset. But the equity numbers, you can see is roughly about 80% of the totals above cutting across both equity room sale, sales of our coal purchased and also stocks. Coming down to Maules Creek. Maules Creek, as most of you will recall, we were only online to do about 2.6 million tonnes in this quarter given the 13 million tonne per annum rate and limit on a calendar basis for the mine. And that weather impact I've just mentioned previously, took the wind out of our sales for basically the total of that difference between the 2 million we've done and the 2.6 million we potentially could have done to get to the 13 million tonnes, which is disappointing. The sales volumes, as you can see there, for quarter 1.8 million have been below equity coal -- equity metallurgical coal sales at only 250,000 tonnes representing 90% of production for the period. Coal stocks at the end of the period at 1.3 million tonnes. We have been drawing those down, of course. And as you'll see the stock movements period-on-period. Overall, Maules is going well. But yes, the weather and COVID-related impacts have been annoying, but we'll get to the impacts of that forward guidance in a second. Narrabri, pleasingly, the change has occurred largely on time, which is excellent. That's not to say that labor types hasn't sort of given us some issues to manage there. It's really just about a juggling act from us because we did redeploy some of our development crews into the relocation effort just to make sure that, that did occur on time. There is a trade-off there obviously with some play, but we don't see a problem right now on that. But we're just highlighting labor is certainly tied to the ROM production for Narrabri was obviously notably modest there at 450,000 tonnes. Saleable coal is just converting inventories into saleable coal, 10,000 sales are about 1 million. So we've obviously drawn down our stocks and stocks at the end of the period at 319. I think that was about 600 higher, about 950 in the previous corresponding -- sorry, in the previous quarter. No PCI sales during the course of the period and the cut and flit timing for commencement is later -- a little bit later based on the contract and supply labor shortages. So we're calling that now for late Q3. And the next longwall move from 10 (sic) [ 110 ] to 203 is in late Q3 in FY '23. I should actually say, I must give the point that the step around will be in this year. And so that from 110A to 110B is going to start in May of this year. And the importance of that we'll get to with the guidance. So to the extent that there are delays in -- for COVID and other things. It's really just -- there's no real tonne loss thereby, so I can say that essentially from a guidance perspective. Gunnedah Open, so I'll just go straight into Tarrawonga. Tarrawonga, like Maules Creek, did actually suffer from weather-related delays there. So ROM production there at 600,000 tonnes was less than what we were looking for in the period, saleable coal production of 400,000 tonnes, is 24% down. We are watching more Tarrawonga, as we previously discussed in the last quarter, just because there's obviously a massive opportunity with the spreads between the lower CV markets and the 6,000. So we are watching more coal. So there is a trade-off there between yield and the higher margins. But overall, tariff is going okay. But yes, we did have some haulage access issues there getting to the plant and the mine itself also suffered from access issue, not as bad as Maules Creek have to say. But clearly, the weather was more per basin above the northern end of our footprint rather than the lowering because when I come to Werris Creek, which is usually the rain gauge for our operations, in fact, we got through pretty lightly, which is good. So it's obviously the Southern regions of it as our production there, 273,000 tonnes was broadly in line with expectations, and that rolls through into the following states as well. So as everyone knows, that's a bypass mine. So the sales really just varies in terms of drawing stocks whether we did that this period or last. That explains the differential of the 2. But Werris Creek has been operating well and thankfully, has cured through the impacts of the weather reasonably well, although its not immune to the absenteeism we're seeing associated with COVID-related isolation requirements. We did move this table for equity coal sales and realized pricing a little bit later than because it probably relates better to the outlook area. So just juggle that around those numbers are there for your consumption. The one thing we did throw in there that's in addition to what we've previously given you was the average coal price in Aussie dollar terms, which is most relevant. So the $211 that I mentioned earlier, $189, obviously, for the previous quarter. So I think we're about $201 more or less there for the first 6 months, which is obviously a very good result. gC NEWC averaged $184 for the period, as you can see in the documentation that we did get a high of $222 for the quarter for quarter settlement. So that's from month till in October. So that's very positive. And the backdrop does look very good. From a sales mix perspective, we have a little bit more the lingering out of spec Narrabri coal still 1 on our stockpile, we'll just blend that through some sales has slipped with logistical delays we've seen, which I'll cover in a minute, has slipped into the second half. But that's relatively modest in terms of its impact and we'll bleed that into the higher spec coal sales during the course of the next 6 months. It doesn't materially impact the business too much, thankfully because it's relatively modest. And we still will be able to maintain gC NEWC plus average for the second half, which is what we previously said to you. So look, the market looks pretty good. And I think we look forward to significant cash generation what was always going to be as big as second half, but obviously, with some weather impacts, it has made it slightly bigger on top of that. The outlook, of course, everybody can see that for one of a number of reasons, whether it be weather-related or production curtailments or redirection of sales in the export market, as we've seen in leisure into their domestic requirements. Market is very tight. Customers are coming to the market looking for sales. We have seen a couple of these -- of tenders being opened with no bid. So that is obviously indicative of the fact that we've got a very tight market on our hands, and some customers have actually gone away with lower rent coal of what they're intending to buy. So that again reinforces the notion that the market is pretty tight and that the queue that you can see of the coast at Newcastle is symptomatic of a shortage of coal right across the coal chain. So it's not just the tonnes that we've missed out due to weather. Relatedly, obviously, the logistics update, really just to let you know that the port certainly has been up and down a little bit in terms of the consistency of its ability to bring both in the weather has played a part in, not just high winds and swell, but also then the rainfalls that we've received flushes a hell of a lot of freshwater through the port. And when that occurs, we can't bring the bigger ships in because of all of these reasons. So there's been a little bit of an impact there, as you can see, we're quoting about 50 ships there across the 2 ports at the end of the quarter. From a hedging perspective, the normal hedges we put in place have been augmented by further hedges that we've taken out just to lock in some what we thought to be a good currency position for the balance of this year. But it doesn't extend half 30 June, so we'll underline quite quickly. But we put an average in there 71.8%, as you can see, for a decent portion of our U.S. dollar revenue for the second half. Just quickly on the projects, I'll just call out a couple of highlights. Narrabri, some of you would have seen that's been recommended for approval, Stage 3, which is very positive. I mean that was supposed to happen before Christmas, so a bit avoid about that not being able to hold. The IPC hearing ahead of Christmas, but that is what it is, but it has come out now. And I believe the IPC hearing is scheduled for mid-February, which is very positive. I'd like to move that forward because, as you know, we're still waiting on the resolution of the appeal of the case against the Federal Minister environment. So no major change there. But our public exhibition for Winchester South has concluded, we've got some feedback now from the Coordinator General's office on submission. So we'll work through with them to clear those out over the next few months. Over to guidance, as I say, there's lots of -- I'm sure I'm just belaboring a point here. There's lots of unpredictable aspects to this weather-related obviously being one. We're seeing plenty of weather up in the North still, and we've had our own impacts more localized. And then, of course, COVID has caused a 5% decrease in our expected ROM production for this period. So we have reset our guidance in that sense to 19 million tonnes to 20.5 million tonnes. And then the cascades through the individual mines themselves. Maules Creek at 11.3 million tonnes to 11.7 million tonnes; Narrabri, 4.3 million tonnes to 5 million tonnes and that hasn't changed, as you can see, and that is, as I mentioned earlier, the comment that if there are some delays there, it does eat into the change uptime. So a little bit of the change out time might flip into the new financial year but the following the wrong volumes, which would largely be deliverable in this year as a result. Gunnedah Open Cuts, a small variation there. We do have a bigger run own for all our mines, as we always said at the beginning of this year, the second half would be bigger than the first. And so there is a related cost impact for these things, though, as you can imagine. I'm sure you've heard many companies before us in the last few days of this week, talking about diesel prices. Certainly, the impact on us is about $3 a tonne we're estimating for the year. It's been a significant jump, obviously, from up to, what, $90 now. So -- $0.90, sorry. So that's a big change. The managed costs associated with disruption in coal supply and production, that's $2 for us. That's, as you know, the take-or-pay under absorption that occurs when we're unable to get the tonnes into the market as we would hope. The volumetric impacts of flooding, there's about $2 in that and COVID absentee is $1 to $2 is a further impact. So our range for cost of coal now is $79 to $84. As you can see, lots of those impacts are relatively temporary. But they are there, and we should just call them out. Now the basis to that guidance, the note there, we put at the bottom of the guidance reflects the continuation for the remainder of FY '22 of the recent COVID labor experiences that we've had. So we have taken a relatively conservative position here in doing this, projecting continued labor shortage as a result of isolation requirements and extended that out to 30 June. Like everybody, we've been using some medical services advisers to give us a view on terms of -- just formally having our strategies in terms of how to manage COVID and the wrap test of managed programs that we've got running across our business, which has been well received. They're saying that Omicron will run off relatively quickly, but obviously not as quickly as it ramped up. And they're calling potentially a peak of it around about now. It's not a week away. But around about now, and they're saying that by the end of February, we should be on the other side of this. Now we've taken a bit more of a cautious approach to that than what these medical services consultants are telling us. And we put that into our guidance here just to be on the cautious side of things. So if that doesn't play out the way that we've induced, then we can see ourselves moving back towards the end of -- the middle of the guidance rather than sort of the downside, which is the continuation of COVID impacts the way they currently are affecting us. With that, I'll bring that to an end or get on to the Q&A I think so. So I might hand back to you, operator, then we can move into the questions that are in the queue already.

[Operator]

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

[Rahul Anand, Equity Analyst]

I'd like to start with the first one on volumes. So you've identified about 1.1 million tonnes of volume impact due to rainfall and COVID. The guidance cut today is about 1 million tonnes. I guess I wanted to understand what type of a contingency do you have in the new guidance in terms of NSW reaching that peak in February or maybe first or second week of March. So just trying to touch upon the contingency. And I guess the second part of that question is, Narrabri, you've had some delays, but as you said, no change to guidance. Is that all going to be met by stocks being drawn down? I'll come back with another question.

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

Yes. Thanks, Rahul. Yes, the 1 million tonnes that we've lost to date, we certainly think we can draw back some of that and have done a little bit of that already in -- just in the opening weeks of this month. But the second half is going to be bigger. We think we can manage that. So we've put some contingency in there, as I say, just on the COVID side of things in particular. So if that advice that the runoff of cases and things by the end of January is much better than there's upside. But based on what we've seen, we've certainly chosen to extend that a little further, just because our experience to date hasn't been the same as the national average. And so that's why we're cautious on that. We know that there's regional impacts as the government only really talks about the national average or the state average and our regional impacts are somewhat different to that. So we think we can manage the second half, which is larger, as I said, anyway, in order to reach those milestones. On -- sorry, the second half of the question was.

[Rahul Anand, Equity Analyst]

About Narrabri.

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

Yes. But Narrabri, we've got to finish the panel, I suppose, is what I'm saying. So there's a -- so I'm talking about ROM production here, whereas your -- what you said there was more related to sales in your second part of your question. We've got to finish the panel. So if there's a slippage because of COVID-related impacts, say, for instance, or production issues, then a bit more of the change-out falls into the next year. But it's unlikely that the scale of any of those changes or the scale of any of those impacts would actually see us not being -- not finishing the panel of 108 in this financial year -- the balance of the financial year. So we don't expect to see any ROM production issues there associated from delays or COVID to change the guidance numbers. Now you quite rightly pointed out that, of course, if that's the case and tonnes have hit the deck in the profile that we would have liked, then there will be some further sales impacts, which has been factored into the sales guidance we've given there. As you can see from Narrabri, currently, there's some stock, but it's not -- there's not huge stocks on the ground at Narrabri. So we -- and we do want the fresh coal to blend the way to the balance of these the remnant coals that we have from the last panel sitting on the ground as well. But the key thing there is the wrong targets likely to get used, but there might be some potential for some slippage there from sales, which has been taken into our sales guidance.

[Rahul Anand, Equity Analyst]

Perfect. Next one is for Kevin. I was just going to touch upon the gC NEWC pricing discount, Kevin, going into, I guess, the second half of FY '22. Obviously, some volume delays now being faced given logistical challenges and also production. How should we think about that discount for the second half of FY '22, please?

[Kevin Ball, Chief Financial Officer]

Rahul, good question. If you have a look at the stocks that are left at Narrabri, there's about 400,000 tonnes, I think. I got back on the last page, sorry, 319,000 tonnes. That's principally been the source of below gC NEWC material. Now in the second half, we're going to have production out of Tarrawonga, Werris Creek, Narrabri with fresh coal, and Maules Creek continuing with its quality. So our expectations are that the second half with gC NEWC plus, I think, is the answer that I have in my head. First quarter might be gC NEWC a little bit minus. Second quarter will gC NEWC plus, on average gC NEWC plus for the second half.

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

Rahul, I'll just take that. From the port and the amount of ships, it's interesting to note that the weather impacts are largely gone. That's not to say we won't have further other impacts, but the demurrage impacts that we're seeing and the shipping queue that we've observed there in our note today, that's really about coal shortage. Like it's not -- it's coal availability across the whole of the industry exporting out of Newcastle. So it's -- there's definitely some tightness in there one way or the other, whether it was weather-related, which is more our case but thankfully it's gone. We're not having any difficulties in getting out our products through the port at the moment. So I do expect that, that 50 number will come down relatively quickly in the second half. But everybody is -- it seems like there's a shortage of coal right across the market, which obviously speaks to the $215 on average price that we're seeing month-to-date at the moment.

[Rahul Anand, Equity Analyst]

Yes, indeed. Okay. Final question for me. You've talked about net cash position by March. I guess, this question has been asked before. But how are you thinking about reinstating the dividend once the debt is paid off? Should we be thinking about anything at the midyear? Or is it fair to say we defer it until the time you fully paid off dollar in a stronger cash position post payment?

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

Yes. Look, Rahul, I think we'll just leave that comment that we've left in the document to stand on its own. I mean, we've got our half year results out in 4 weeks' time. And so we'll be saying more about that. But it would be fair to say we're open-minded to all the necessary means of conveying returns to our shareholders who have been patient. Obviously, the business is generating good cash. We're on a very positive path there. So I think you'll see something more clear -- more clearer from us with the half year results on this. So -- but as I say, open-minded, all measures will be on the table in terms of how we want to deal with that.

[Operator]

Your next question comes from Lachlan Shah with UBS.

[Lachlan Shah]

So I've just got a couple of questions on pricing. So obviously, right now, gC NEWC has rallied pretty hard again. Just interested in how you're seeing the outlook there? Obviously, gas prices have come down. China's production of coal is up. How are you thinking about the JFY settlement coming back -- coming through this year? And I'll come back with the second question shortly.

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

Yes. I think all these aspects are important to it. I think, obviously, the Indonesian position plays into that to some degree as well, local, which we understand that is easing, although it's not clear the rate at which that Indonesian withdrawal from the export market, the pace at which that these will occur. So we see further tightness. Our customers really are screaming out for coal. So we'd love to have a bit more. And I think that underpins a good market going forward. Cash prices you say these, that's good, but still very -- coal is still very competitive on that basis. So look, it's definitely much improved market from what we've seen in the past. I mean, if you just look at those average revenue numbers a year ago versus now, and that's quite a considerable change.

[Lachlan Shah]

Yes, for sure. And then just a second question, again, on pricing, relating to met coal. PLV ex-Queensland hitting record highs, again, weather tightness and COVID disruption driving through there, and semi-soft is following or starting to follow at least. How are you thinking about the mix between semi-soft and thermal? And do you think you'll try and wash more where you can?

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

Yes. We're certainly washing for the purposes -- we're washing for the purpose of the thermal premiums, not washing for the purposes of incremental semi-soft sales. just so we're clear on that. We've renewed our term business for semi-soft sales, and that's been very positive. So that's happy to do that. But -- and we observed the Platts spot prices increasing, as you're indirectly referring to. But we haven't been chasing any particular semi-soft sales over and above the term business we have. We don't think there's actually a lot of volumes sitting behind that Platts number at the moment. And in our sense, it's still very worthwhile to be sending our coal into the thermal price -- the thermal market where the prices we're achieving. So I'm not looking for a major change from a met coal to thermal split in our business at all. I think we'll service those existing longer-term customers. And wait until we see further real volume substance behind that spot market in the semi-soft in particular.

[Lachlan Shah]

Great. And just a follow-up, if I may. You had a comment that semi-soft demand was weak in the quarter. Any insight you can help us with there?

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

I think the challenge there was semi-soft is that -- the incremental buyer of semi-soft was always the Chinese, and there's the market obviously for the semi-soft coal for a long time. So we've been talking about this for some time. We've not changed incremental sales, whilst that participant in the seaborn semi-soft trade has been absent. They're satisfying their own needs largely through additional production within China.So just to say, the indexes -- the spot price has gravitated upwards, as it should, with the PLV going the way it has, as you already referenced. But what's the substance behind that? We think it's relatively thin. And so if you're trying to get away some good volumes at that level, I think that might be a challenge. So in our instance, we've been -- our conclusion there is we should continue to focus on our good long-standing relationships in Japan, Korea, India and Taiwan. And so we've renewed those term business, but we don't see the depth of the market still in the semi-soft market. We don't see that returning quite frankly, until we see perhaps China reengaging in the semi-soft side of industry. But obviously, if it's Australian source, that's a problem.

[Operator]

Your next question comes from Paul Young with Goldman Sachs.

[Paul Young, Equity Analyst]

First question, Paul, is on specifically on Maules Creek and around the weather situation has been wet into the New Year. Where are you at the moment at that mine, specifically to 9-play mining rates? And then secondly, the labor and weather issues, have they impacted the automation, truck automation rollout program there much? And also at Narrabri, just on the underground development, the float. Have you had any impacts on the forward development?

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

Paul, thanks for that. There were few questions in there. With Maules Creek, once we're actually -- the weather didn't do much damage to the site itself like in terms of rig work and things and roads that need to be rebut but that wasn't the issue. The issue was just lack of access as the roads feeding into the highway itself and then the roads off the highway to the mine were cut. And so the rivers flow and took over all the access points. So getting back to mining rates wasn't the problem or wasn't the issue, or restoration of the site wasn't the problem. Getting back to mining rates only really been affected by the absenteeism that we've seen associated with dysfunctional state border arrangements. That seems to be easy as it relates to Queensland. And then, obviously, Omicron causing some absenteeism on a daily basis where people are getting alert saying that they need to isolate. And so that's really the issue for us now. Running at the rates we want to. The downside of that guidance is predicated on us having an ongoing cohort of absenteeism throughout the balance of the year. But we don't think it will -- we certainly hope it won't be that bad based on the advice, as I mentioned earlier, that we're receiving that there's a wind-off. They think every we've taken a more conservative view of that. So Maules Creek is in decent form out there early in the week and the pit is looking very good. And so that -- I'm not concerned in that regard. AHS hasn't been running for a little while. And we're looking to start that up next month again. The issue there was really just over the Christmas period with lower amounts of people and so on to work that's been a little challenge. We have -- there were some areas in being able to sustain the AHS separated and segregated from demand side of the pit. So we took a pause on that while some software upgrades have been dealt with, and I can get Ian to talk to that a little bit more. And then sorry, the Narrabri one?

[Paul Young, Equity Analyst]

Narrabri float.

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

Well, the float. Look, the float is hand, but we're consciously watching that. We don't put too much float, we will not be too little. So that's not an issue right at this point in time.

[Paul Young, Equity Analyst]

Yes. Okay. That sounds pretty positive on Maules from a mining perspective. That's great. Next question for Kevin. Kevin, thanks for that information about the -- where you think pricing will end up versus NEWC. That's really helpful. Just on -- further just on pricing. As far as your sales volumes are concerned, are you fully sold for this half, like you said you don't have a lot of coal available and there's a lot of obviously interest in additional tenders. Are you fully sold? And secondly, can you and are you looking to still locking in sort of fixed higher prices on a more of a half year sort of yearly basis?

[Kevin Ball, Chief Financial Officer]

Yes. I'll let Paul talk about the fixed price because of our size of contracts. Look, I'd say we're pretty much fully sold. That tonnage, the drop down of the guidance would have been the variable tonnes that we would have been selling in the second half of the year. Now we're fully sold. And so my expectation is that second half volume will be bigger than the first half volume, it's got it to meet the guidance part. Our expectation is that prices will remain relatively elevated. And therefore, we're really comfortable looking at those numbers around retirement of the revolver in February and being net cash in March. And it's -- and we've held that position now since about August-September last year. So it's been a constant in the discussion in the business. The impacts of weather and COVID pretty much taken care of. You can see the impact in December. So my take here is the second half is going to be a pretty good second half. I'll probably say, a cracking second half.

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

Yes. Just on the fixed sales, we're not changing that markedly. All we did, obviously, as you can see, took the currency out of the equation to a reasonable extent on, of course, all of it. I mean, we're within our policy there to do that and that's, I think, 60% of revenue can be hedged. So we've taken the currency off the tail, if you like, for about 60%. But -- and we have been picking the eyes out of various opportunities and contracts where we have an option to swing into a fixed price on some of our sales. So we have been looking at that and have taken a number of those opportunities already, which will go to -- which will help us underpin, of course, a gC NEWC plus type average in the second half, actually. And so that's been positive, even though the market is looking very point anyway as it is. So that's been good. The balance of the fixed price stuff we have is, as you would imagine, just the out spec or the out of gC NEWC spec material. That's all generally on a fixed price basis rather than the floating for the month, as you know. So no material change in there.

[Kevin Ball, Chief Financial Officer]

Yes. And the guidance for that, Paul, is if you have a look at the corporate side and then there's about $99 million worth of fixed price forward sales pretty much normal. Yes. Normal and there's about $700 million floating, which is only a proportion of the total revenue in the second half.

[Operator]

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

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

Page 5, table on equity profiles and the sales mix. Paul, is just thinking about the current quarter and the quarter ahead, so the March quarter to June quarter. It feels like met coal sales will stay low, so circa sort of 12%. So how does the mix between high CV and other change over the next 2 quarters? With Narrabri heading back to normal, do we see that 60%-ish number tick back up?

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

Yes. Yes. Thanks, Peter. Yes, sorry, I wasn't quite sure what that was the end of the question. Normally, you have 2 or 3 at a time.

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

I got another one coming.

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

Yes. Met coal, it will tick up a little bit actually because just now we have resigned some contracts with term business. So there might be a tick up in that a little bit. The other thermal coal, the 27% that we've registered here that we have seen a few sales, as I mentioned earlier, slipping to the second half with fresh coal coming out of Narrabri. The production of that coal is much diminished. So we've returned back to its 5,900, 6,100 type range that it works within. So second half, as we're saying, we're going to have a gC NEWC plus. But that's not to say we don't have a few little -- a few sales out of spec coal in that second half, but it won't be influential in being able to maintain a gC NEWC average for the second half as we've previously stated. So we are watching, as I mentioned, more at Tara, and that's sweetening, that called up. So there'll be no -- there's no material out of gC NEWC presence from Tara, where as always is, as you know, at the [ 5,700 ] type range. So that is -- that will be the majority of the coal that gets sold in the second half that where it's sold as a discrete product. Otherwise, we've ended up with the additional washed coal that we have out of our other operations.

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

The medium-term, Paul, where does that other fuel core percentage go? How much does it compress?

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

Yes. Look, if -- we're lending, obviously, to minimize the impact of Werris just because, obviously, the margins are so good. If you take the vending option rather than trying to have discrete sales into what's largely a Korean-spec product. And we've only got 3 years left of Werris Creek to deal with there. So that naturally gravitates up more to a gC NEWC average. Obviously, the source of it, it's almost 6,000 type coal has really been fault-related production. And that's not to say from time-to-time, there's not a plan or something you encounter there that is rise to a little bit of a higher ash material. But over time, that also gravitates back towards the gC NEWC spec. So 5,900 to 6,100 in the case of Narrabri. Narrabri, obviously, as you know, doesn't carry the same energy that Maules Creek or Tara or Vickery would. So -- but if it will move back in 203, we'll get into some better ground there, and you'll see that come off. So 203 is not so to say, Q3 in '23.

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

First, I envision in 3 years' time situation where the split would be premium 80%, met coal 20% and no other or minimum like tiny other?

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

No, you will still have -- well, I think you're still going to have some out-of-spec coal there. So I wouldn't want to put a prediction out here in that regard. But yes, in 3 years' time, Werris goes away, right? So there's one source of that, that is gone. So you'll be definitely much better there. Narrabri should be back in that range, as I say, hovering around has never been the energy-rich source, just its benefit is low-ish, generally, not extra energy. So I'll resist the temptation to put any predictions on it. And this is your other part of that was where is the met coal going. You were saying 20%. Our current trajectory in that area is captive to interest in semi-soft. And so I think over the last 2 or 3 years have hold us enough not to predict too much of our semi-soft future split, given that it's been a couple of years now since we've actually seen a buoyant semi-soft market other than through the term business that we hold.

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

And Paul, a clarification. Back to the comment on dividends. So the question asked about dividends. Would the comments from the Chairman of the AGM be the best comments can probably domain about that until we get your actual delivery at the February results?

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

Well, it's only 4 weeks away, so there's not long to wait. Obviously, the business is in a much improved financial position and the outlook looks really good. The stock is cheap. That's is about as far as we probably want to go right now. I mean -- but we'll have a more comprehensive discussion on this in 4 weeks' time. So I'll just ask you feather to hold your horses until we get to that point.

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

And lastly, Kevin, finance. You put out a slide about your financing deck last year. And you talked also about debt capital markets in Asia at the capital markets. Now you got the luxury of sitting there with a net cash position in a month's time. What the revolver runs out against July '23. How do you juggle the debt that you've got there? Is the Asian capital markets still an option? Do you roll the revolver? How do you see this debt tranche player?

[Kevin Ball, Chief Financial Officer]

You didn't read the treasury paper, haven't you? So the answer is that...

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

I'm writing the Board paper now.

[Kevin Ball, Chief Financial Officer]

I look forward to receiving it. The answer, I think, is we've rolled the revolver, and our expectation over time is the revolver becomes less prominent in the capital stack. Pleasingly, debt capital markets across Asia have improved since that last little wrinkle with the Chinese property companies. And I think we want to put our toe in that order. But there's no mad rush for it. and we'll take our time to do it. We -- as you point out, we're in pretty rude health coming to the second half. And so I think in time, we will be in that debt capital markets. We will remain and retain relationships with Australian banks. This is a transition, a lot of truncation is how I describe it. And that's what I see with Australian banks. They're participating with the view out to 2030 and 2035. So I hope that answers your question.

[Operator]

[Operator Instructions] Your next question comes from Alex Ren with Credit Suisse.

[Alex Ren, Equities Research Analyst]

Just a couple of quick questions from me on various assets. Could you give us a bit more color on how you're running up the growth options, particularly given where the pricing is these days? I suppose this question comes with 2 parts. Firstly, what is the priority completing on brownfield and greenfield expansion? And secondly, are there any discussions with the other partners at most to take whatever is like up to 100%? I'll get back on the second question.

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

Yes. Thanks, Alex. Look, I think at this point in time, as I mentioned earlier, there's a couple of hurdles there just with our growth options. I mean, we just further back in the queue. So that's going through the necessary parts of the process there, and we'll work through that in an orderly fashion, the state government up there has been pretty reasons. So don't envisage any delays there. Vickery, as you know, is subject to the same outstanding matter that is an inclusion of you against the Federal Minister for having approved the project. We are moving ahead with all the secondary approval related matters. In fact, most of that management plan activities are -- have been submitted, and we're looking to into off relatively quickly. But we have said previously that we're not looking to put a growth project on the table before the Board for at least another 4 months. So our priorities here to get the balance sheet in shape, return to a more normalized pattern of capital allocation and distributions for shareholders, and then we'll bring a project to the table when that is the right time to do it. There's further work going on there in the -- behind the scenes on Vickery, just in the meantime. In terms of Maules Creek, you've mentioned 100%. I'm not sure that the 100% is up for grounds or mining or aware of the top 2 spaces, 15%. And so the question is probably better directed towards top 2 in that sense. We're obviously like Maules Creek. I think the asset has got a great future. And so we'll watch that process clearly. We're not aware of any real progress over the last month or 2 to 3 to 2. But yes, I suggest that, that question we get in directed to we'll talk to you to get some color there.

[Alex Ren, Equities Research Analyst]

Great. That's very clear. And I guess on Vickery, is there a rough time on the secondary approvals at Vickery and obviously the cultural heritage sort of remains under the spotlight and is going through some big changes in WA. So would there be any cultural heritage issues impacting the progress? And I suppose the last question asked. And Narrabri longwall move into 203. So how long would that turn over time be roughly?

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

Yes. Thanks, Alex. Vickery, no cultural heritage issues there that we should be concerned with there. Like there's no particular nuances, as you say. There's obviously a report come out in the post Juukan Gorge period. But there's nothing there that we're concerned about as it relates to Vickery. So the idea that there will be some changes to that cultural heritage preservation framework nationally and also in the state. I think that's fair to say that there will be. But we don't have any particular cultural heritage sensitive sites at Vickery, has previously been mined. And so it's -- we're largely clear of those types of issues. Now we'll move at Narrabri, that's definitely a bit of a move because we're obviously moving from the Northern end of the pit into the shallower Southern end of the pit. And so there's a bit of work there. But that's -- that will be fine. We've got some [indiscernible] in the ship, as you know. And so it wouldn't be outside of the normal 8-week period. It's at the better end of it 6. But if it takes a little bit longer, it's 8. This is a business move, but there should be no real change outside of that period.

[Operator]

Your next question comes from Glyn Lawcock with Barrenjoey.

[Glyn Lawcock, Mining Sector Analyst]

Paul, I was wondering if you could just put some numbers around your workforce comments like the absenteeism you're experiencing, what sort of percentage? And have you seen it trending up or down in the first 3 weeks of this calendar year? But also turnover, I mean the market is tight for labor up and down the East Coast. And I think in the past, you've suffered a bit of labor loss because you're not the biggest payer. What's happening with turnover rates across your business as well? So that's on the labor side. And then the other question is just, if gC NEWC continues to rally like it is, can you still achieve the premium in the back half given a lot of your floating tonnes for lost? So I'm just like if keeps rallying, can you still get that comment that you've made?

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

Yes. Let me try and deal with -- I'll try and take that not as a slide. We're not like Barrenjoey and the largest payers in the market, Glyn, but it's good to hear from you. I'll refer first into the labor-related matters and might be the best way to deal with that, both on absenteeism from COVID and then also tightness in the market, that's hope those points are very important to try to raise and thank you. As far as the gC NEWC rally, yes, we did lose some of those extra tonnes, which are uncommitted. But as it rises, I mean, we're going to get -- we're still going to get our premiums on whatever month those tonnes have settled in. There's -- we don't -- we haven't had a material change to the fixed price profile or percentage of tonnes in our mix. We have converted over a few sales where there was the opportunity to do so. But as I made a comment earlier, was it material to be overall. The overall sales portfolio in the second half we will be exposed to the index has settled in the month in which those deliveries take place. So I'm still looking to have a good second half year. And as I say, on the whole, gC NEWC average at plus for the second half is where our target is. And I feel quite confident we can deliver that with the extra washing that we've got. Ian, you've got off this pretty lightly, so I won't refer to you in terms of labor tightness and absenteeism from COVID.

[Ian Humphris, Executive General Manager of Operations]

Okay. No problems. Look, I guess, if you look at the absentees associated with COVID, as Paul touched on earlier, I think the site has done a fantastic job over the last couple of years and until basically this Christmas upswing associated with Omicron, the impact to the sites associated with COVID was quite minimal, to be frank with you. And I mean, it took a lot of effort. And all of the sort of controls that we put in place, segregation, mask wearing and the employees taking a responsible stance there reporting they infill well, et cetera, and not turning up to work. So I think as an organization, we did really well during that period. If you look at sort of the sort of numbers that we've seen with -- and on these is a direct related type of employee, how we measure this into the business. It's just over 100 and probably around probably 120 so far more recently. But that undersells the -- where the size of the impact because a number of people haven't come to work or they've been close contacts, et cetera, or casual contacts and haven't come in to ensure that nothing is spread. I think the other thing, too, is when you're trying to talk COVID numbers, it's not just a straight numbers exercise. You've got to look at the skills and who it's impacting. For example, it may impact, say, statutory roles, deputies underground. And we did have a short period of time there where we had quite a number of deputies impacted at Narrabri, which then had the flow on effect of not being able to necessarily run a couple of our development panels during that period of time. And that can sort of flow on to other areas where there's sort of small numbers of people, continuous miner operators, shop fires, et cetera, across the business. Having said that, I guess, the business we've also been looking to prioritize the work areas, and I think Paul touched on, I mean, the longwall had the priority of people over that Christmas period when we were down on some numbers. So trying to predict sort of how many on an average basis is quite difficult because it comes up and down and can also sort of be dependent and we've seen this on maybe a sort of a community event and in and around Christmas. And our employees being largely local, may have attended those. And we've had some peak spots where we've had to manage through associated with that. So does that give you enough color on the COVID side of things?

[Glyn Lawcock, Mining Sector Analyst]

Yes, that's great. But I mean, what would 120 represent as a percent? And is it trending back down now the percent during the last 3 weeks?

[Ian Humphris, Executive General Manager of Operations]

If you try to ask for a percentage, I would say that sort of we've got a fleet away at a time sort of things probably, but it can vary to multiple fleets per se, a day or 2, as I've indicated to back to sort of a fleet of people. So that's sort of the variation we're seeing over the last few weeks. But having said that, if I look at Narrabri now, which had a pretty tight time over Christmas, it's getting back -- getting very close back to normal now.

[Glyn Lawcock, Mining Sector Analyst]

Okay. Great. And just the turnover?

[Ian Humphris, Executive General Manager of Operations]

Telling the people, one, like all of the mining industry, we're dealing with the labor and skill shortage. We're working on a number of initiatives to improve that position, both not only for our own employees but contract employees. So we're obviously working with the various labor high providers we've got. And I mean, you touched on. So obviously, some of that work is ensuring that we've got market competitive remuneration. We're looking at working arrangements, maybe some additional benefits. We're doing a lot of work in looking at some areas -- geographical areas that may have been untapped previously to see whether or not there's a labor pool there. As Paul touched on, the border restrictions, hopefully, we'll see that relaxing in Queensland, and we'll be able to tap into some more people there. And I guess the other one, we'll also always consider our ratio of contractors to Whitehaven employees. So there's no one silver bullet to this exercise and everyone is in the same boat, but we've got a sort of high-level focus on ensuring that we can get that turnover rates and absenteeism levels down.

[Glyn Lawcock, Mining Sector Analyst]

But is the turnover rate above average at the moment or in line with average? Just sort of curious where it sits against sort of history.

[Ian Humphris, Executive General Manager of Operations]

I don't think it's any higher than historical. We are short some numbers across the sites, and that's what we're looking to fill those holes with those initiatives that I've indicated previously.

[Operator]

Your next question comes from Tim Zhao with Lazard Asset Management.

[Tim Zhao]

I just got a quick question on Maules Creek. Obviously, with all the floods and the COVID, the second half has been producing under the sort of a license volumes. Does the debt gets carried into the following years or not probably the subsequent following half but in the later in the year?

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

Tim, Paul here. No, you don't get to carry that forward. 1st of January New Year, you've got 13 million tonnes to work with that fit. So whatever you didn't get in this quarter, the December quarter just gone, but that weather-related 600,000 tonnes that we missed. That's -- that have to -- the call is still there, obviously, to be explored in the future periods, but the 13 million tonnes reset occurs on a hardest date on the 1st of January.

[Operator]

That's all the time we have for our questions and answer session. I will now hand back to Paul Flynn for closing remarks.

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

Thanks, operator. Thanks, everybody, for taking the time. I look forward to catching up. I'm sure there will be subsequent questions that come out of this. We're only 4 weeks away from the half year results. So that will obviously complete the picture in terms of what has happened in the 6 months through to 31st of December. But again, if you've got any questions, you know where to find us and look forward to catching up with you between then and potentially at the half year. Thanks, all. Thank you, operator. I'll hand back to you.

[Operator]

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.