Whitehaven Coal Ltd

ASX:WHC

Earnings Call Analysis

Highlights from Company's Earnings Call

The company reported coal pricing at $216 average for the quarter, with December coal sales 21% higher than September and managed sales up by 20%. Safety improved with 16% better TRIFR than last year. The acquisition of Daunia and Blackwater was a key milestone, underpinned by a new $1.1 billion facility to cover costs. Despite geological issues at Narrabri, overall coal production was solid, leading to 8% higher saleable coal production at Maules Creek. They are confident in their liquidity for upcoming payments, including a significant payment to BHP in April, supported by their plans for a strong third quarter. The market remained robust, with thermal coal prices around $130, and they anticipate consistent demand.

Quarterly Performance Emphasizes Consistent Output and Margin Pressure

Whitehaven Coal's latest quarterly results presented an engaging narrative, beginning with stable coal pricing at a healthy average of $216 per tonne for the quarter, signaling steady demand and market durability. Despite slight downward pressure with a 4% decrease from the previous quarter, demand remained consistent, offering solace to investors concerned about market fluctuations.

Strategic Acquisitions and Financial Prudence Underpin Future Growth

Striking a transformational move, Whitehaven announced the acquisition of Daunia and Blackwater mines, backed by a substantial $1.1 billion USD financial facility to cement the transaction. Demonstrating fiscal acumen, the company's strong net cash position of $1.5 billion AUD even after significant outlays speaks volumes about its financial health and strategy.

Operational Highlights Reflect Robust Production amidst Challenges

Operational efficiency was evident at Maules Creek, which showcased an increase in output over the previous quarter, while maintaining a steady sales trajectory. However, the approach to Narrabri's production was adjusted to manage geological issues and equipment reliability concerns, leading to a 29% decrease in production for the quarter, yet the company achieved an improved safety record with a 16% improvement on last year.

Firm Market Presence in Spite of Regulatory and Environmental Hurdles

Whitehaven continued to navigate market dynamics adeptly. Although hampered by the domestic coal reservation policy which mandated lower pricing for a portion of their sales, the leadership's tactical maneuvering mitigated the impact. The market held strong with semi-soft coal pricing at a low, yet the company's diversified portfolio cushioned the effect, preserving overall value.

Portfolio Enhancement Opportunities through Joint Ventures and Projects

Building further on its growth strategy, Whitehaven is exploring joint ventures, particularly for the Blackwater asset given its strong market demand and quality. The company also continued to invest in development projects, with significant funds allocated to the early mining case of Vickery. Additionally, the integration work for recent acquisitions is progressing smoothly, reinforcing the company’s commitment to a robust expansion plan.

Financial Flexibility and Liquidity Position Builds Investor Confidence

The company's executives conveyed confidence in Whitehaven's capacity to settle upcoming transactions and manage associated costs, relying on a strong third and fourth quarter performance. The cash flow consideration, including the receivables unwind and ongoing planning for integration, heightens investor optimism about the company's liquidity and readiness to tackle future obligations.

Earnings Call Transcript 2024-Q2

[Operator]

Welcome, ladies and gentlemen, to Whitehaven Coal's Q2 FY '23 (sic) [ FY '24 ] Quarterly Production Call. [Operator Instructions] Thank you joining us today. I will now hand over to Managing Director and CEO, Paul Flynn. Please go ahead.

[Paul Flynn, executive]

Good morning, everybody, and thanks for -- everyone, for taking the time to dial in this morning to our Q2 quarterly report. I should say Happy New Year to everybody, I suppose. You can still say that until the end of January. Can't you until you've met everybody who you normally see?

Look, as usual, just go through the highlights for the coal's report and then go through the mines themselves and open up for Q&A. I understand there may conflicts in terms of other meetings, other quarterly releases going at the same time. So I'll try and keep it stuff before you and move into the Q&A so you can get your questions on the table.

The highlights for us in terms of coal pricing, $216, healthy average for the quarter, decent result. December quarter run-of-mine production consistent with September. So had a 6% deviation there. December coal sales on an equity level at 3.7, 21% up on September. December managed sales produced at 4.6, consistently also 20% up on September. Obviously, one of the major milestones in the quarter was the announcement of the acquisition of Daunia and Blackwater, a highly attractive and transformational acquisition for us, which I'm sure we'll have some further to say in the Q&A.

You would have seen us also finalize the terms and conditions with the lender group to refinance out the bridge, which we essentially are not using and put in place USD 1.1 billion facility for the completion of the transaction, which was fantastic. The net cash position, you can see that AUD 1.5 billion after having paid our tax long signaled and deposit and other things that related to the transaction.

From a safety perspective, we are trending in a good place, which is very positive to see and more work always required in this area. But our TRIFR at 3.96 is a good result and 16% improvement on last year. So a very good start to the year. We want to make sure we continue to drive this hard through the balance of the year, and especially as our business is getting bigger, we definitely want to make sure that this focus is consistent right across that transition period.

From an overview perspective for the quarter, we had a good quarter. So we're happy with the overall numbers here that put us on the pathway for our production guidance, which is good. The mix has changed. Open Cuts done very well and trending towards the top end of their ranges. Narrabri has had a more challenging time of it with some geological issues and some equipment reliable issues, which we can talk about as well when we get into the detail of the things. Managed sales and equity sales, as I mentioned there earlier.

The tables are there for you in terms of the managed 5 million just over compared to 5.3 for the previous quarter. So for the 6 months, that puts us in a good place at 10.3. The saleable coal production managed at 4.1, again, very consistent with the previous quarter. So that's looking good on all fronts there. Coal stocks we have drawn down a little bit, and that would have been a function of [indiscernible] wanted to get the sales fall up despite the fact that Narrabri probably produced a few less tonnes in the quarter than we would have otherwise liked. And the table below, as usual, gives you the equity proportions for those numbers.

Maules Creek. Maules Creek at 3.1 versus 2.8 for the preceding quarter. It gives you 6 in round numbers for the half year, which is a solid result. So we're very pleased with that as an outcome. Operationally, the North and East pits are opening up nicely, and we are within shooting distance at the completion of coal extraction from the southwest corner, which we've talked about for some time, which will be completed in this next quarter and give us further in-bid dumping opportunities and productivity opportunities going forward.

Saleable coal production for Maules at 2.3 million tonnes, was 8% above and the sales similarly so. Coal stocks at 900,000, broadly in line with the previous quarter. As I said, Narrabri has -- the mix of production for the quarter has changed with Narrabri producing a little less at 1.1 versus 1.5, giving us just under 2.6 for the 6 months for the year, down 29% in this quarter. We certainly have been experiencing some productivity loss associated with the washout features. We are on the panel, as you know, which is obviously on the edge of the washout of the scene.

And that has been behaving in a way where stability has been resulting in lower production levels than we would like. So productivity has suffered as a result. So we've put away 1.1 million versus, say, versus 1.5 million saleable same numbers consistent with that. We have had some mechanical challenges there. We rehanded the machines as many would know. And so there has been a few reliability issues associated with that, which is an extensive engineering challenge to essentially flip over the main gate and sides of the longwall.

But they are -- those issues are dissipating. And we do expect actually over the next couple of quarters to move into more benign ground in that regard, but I'm sure we can speak to that in a minute when we get to the overall mix of production from our guidance perspective. As I did say earlier, the Open Cuts have done well. And so Gunnedah included in that message, not just Maules Creek and both Tarrawonga and Werris have been consistent performers over the first 2 quarters, and this quarter is no different in that regard.

So about 800,000 tonnes coming out from the 2 of them, 500 from Tara and the balance from Werris. Werris, as you know, is coming to the conclusion of its production phase. And we do expect that at or around the end the March quarter, it may slip over a week or 2 into April, but that's when it will be moving then into its rehabilitation phase then after. But yes, good results from both. Nice to see some consistent performance across the first 2 quarters of the year, and our expectation is that will continue over the next coming quarters as well.

From a market -- from a realization perspective, as I said there earlier, AUD 216 per tonne is our number for the quarter. That's a little bit below September quarter by 4%, but a pretty static market from a thermal perspective as we're seeing and you're seeing, of course. USD 135 was the average tonnes for the price for the quarter. We managed USD 142, which is 5% above, which is a decent result. And -- but we continue to see consistent demand in the market. And then you can see the prices are hovering around this level for some time now. So I think there's good strength in the market overall at that level.

The domestic coal reservation policy, we note -- sorry, you've seen there obviously for compliance purposes. We put 153,000 tonnes into this market lamentably and realizing AUD 115 for the privilege of doing that. Pretty annoying is that is there is only 2 quarters left to go with this policy. And so we look forward to seeing the end of that. The tonnes have broadly come out of Werris, as you know, from a quality perspective. And we are putting in potentially the minimum quality we need to in order to meet those obligations as part of that.

Over the table there, the mix of thermal you can see 91 versus 9 the end of it being 72. So our premiums are pretty good to end up given the 72 to 19 split to end up at 5% up, as we're noting in the table. So that was a pretty decent result overall. As I say, the $515 is consistent with what we've achieved from the domestic reservation policy over the past quarters. From a markets perspective, as I say, the market looks pretty solid at around $130, despite the fact we could just come through this quarter, which are generally the shareholder season.

And so from a high-CV perspective, that market has been pretty robust at that level. You can see it's hovered between a range there. We're giving you 122, 147. The mid-coal market looks pretty good. Certainly, the PLV hard coke has been also in a pretty consistent range over the last couple of quarters, 3 20 to 3 40 type number, which would be nice to see the exposure to that for us in the last quarter of this year. The semi-soft and PCI prices certainly have deviated from the historical PLV proportions that you would see. But that is influenced to a good degree by a number of factors.

Firstly, there are supply constraints in the PLV side of the equation, as we understand. And with weather and snow on, particularly in Queensland and perhaps some more even coming over the next quarter or 2. And then you've also got Russia influencing the lower rank coking market. And that is driving certainly a deviation in historical realizations from the PLV price. So as you can see, we've quite a semi-soft priced at 1 61 versus 3 3 3, which is a very low level of realization compared to historical

From backyard, the output has actually seen some volume increase, which is good. I mean there have been weather delays and other things associated with some production issues with that. So the port has actually seen volume step up a little bit, which is consistent with what we're seeing in the market overall. Despite the change in the mix in our production for the period, our guidance on cost remains the same. We are pointing to the fact that we are trending towards the top end of the range with our cost guidance given that our cheapest tonnes generally -- Narrabri being our cheapest tonnes aren't represented in the mix in the way we had set out at the beginning of the year, but we are within our range, which is very positive.

From an acquisition perspective, as I mentioned earlier, we've tucked away the USD 1.1 billion facility, which is a very positive, 5-year facility, a very good spread of people interested in that facility. And with the pricing that I think people have seen in the marketplace with the credit metrics that the company represents, you can see why the interest levels have been strong.

Integration work is going at a pace and plenty of people working on that, and we are meeting our milestones, which is good to see, both internal milestones and also the regulatory ones before us. So competition clearances and other things requiring are progressing, and we are clearing those in a pace that says the early April time line here is assisted with the picking of those various competition clearances off.

From a sell-down perspective, we are exploring this, and we've taken the time over the last month or 2 to think about the way in which we would approach this. Our starting point is actually to address the incoming interest in Blackwater particular, which has been quite strong. And our view is to have a look at this first as a first opportunity to create a joint venture, and we'll think about the opportunity with Daunia at a later date, given that a with our Winchester South and being a more complex proposition in that regard in terms of 2 assets.

So we'll start with Blackwater and move on, given the interest is very, very strong in relation to that asset. That's logical, given Blackwater's quality is well understand being in the market a long time, and people are very accustomed using it. So interest in securing long-term supply here is obviously strong.

Development projects, I won't call that too much there other than to say the $50 million or the $52 million that you see quoted that covers the whole range of things, but the vast majority of that obviously was going into little Vickery or the early mining case of Vickery, which is going very well. The construction site of that is actually coming to an end. And so our construction project for every team are actually in the final throes of handing off to side of things as the only mining project comes to an end and it becomes more of an operational focus.

As we'll be at that time, part of our management team. And we have encountered some of little coal there, which is interesting. So that is going away for testing. So let's small volumes as we're clearing sort of bulk of the works around the site and putting down and so on in some coal has been encountered. It's nice to see, but no change in terms of when we expect coal at the end of the year -- end of this financial year to emerge.

Narrabri Stage 3, there's not a lot to report for you, unfortunately. Obviously, the appeal from the Federal Environment Minister's decision not to do anything during this appeal process is frustrating from our perspective, but it remains in status until such time that hearing next month occurs. Our prospects for this haven't changed in that regard. So we're satisfied with the proposition that this is not a case of any particular merit, but it's just annoying that the time has -- is being consumed with these types of legal shenanigans.

Winchester South, you would during the course of the quarter, the Coordinator-General released their report and recommended that the project proceed, which is very positive. So we're watching very closely as the government moves through the final information of the approval process. From a guidance perspective, what we mentioned there, of course, is that the mix of our tonnes have changed. We still remain within the overall range, which is good.

So the Open Cuts, as I say, we're tracking towards the top end of that range on the Open Cuts side of things, and Narrabri was giving you -- we're giving you a range to work with here at 5.1 to 5.7. Coal sales remain within the targets also. And our costs, as we mentioned, is certainly trending towards the top end with the change in mix of our guidance, but remains within. From a capital expenditure perspective, we signaled along the way that, obviously, we would look at the priorities of capital expenditure during the course of this period with the announcement of the transaction to acquire Daunia and Blackwater. And so those numbers now are in the range of 400 to 450 for this financial year.

So with that, overall, look, from our perspective, a good quarter. Very pleased to bang out a consistent quarter, despite the fact that Narrabri has produced a few less tonnes than we would like. The guidance remains the same, but for that small revision to Narrabri. And with that, operator, I'll hand back to you, and we can get some questions going from the Q&A. Thank you.

[Operator]

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

[Rahul Anand, analyst]

Couple of questions from me. Look, firstly, you've talked about the cost headwinds and the move to the higher end of the cost guidance. Can I please double check in terms of your switch to more Maules Creek versus Narrabri, I would have thought that Maules is a lower-cost asset, probably a higher fixed cost base than Narrabri. Shouldn't you be getting some benefits out of that switch? And then how -- what am I missing deeply?

[Paul Flynn, executive]

Thanks, Rahul. No, no. Look, there's no change from our perspective in terms of the, if you like, the order. And the cost curve merit order, if you like, Narrabri has always been our cheapest coal. But it does, as you point out, have a higher fixed cost base. And to the extent that you will see less volume out of it, obviously, that fixed cost base gets spread over fewer tonnes. And that's what I was alluding to earlier there just in terms of the mix driving a cost trajectory to the upper end of our guidance parameters still within, but trending towards the upper end there. But it's always been the lowest cost tonnes we have and always.

[Rahul Anand, analyst]

Got it. Okay. And just a follow-up there. Obviously, Maules Creek doing really well this period. Any sort of relief from that automation side that led to this? Are we progressing more towards a resolution to that situation? Or is this purely just operational improvement on the back of new mining areas opening up?

[Paul Flynn, executive]

Look, I think the mine planning is improving. The quality of the mine planning and the execution of the plan in the quarter, it's certainly been a real focus for us to want to get just more consistent production out of the site. The quarter is actually typified by a combination of both autonomous and manned. In fact, we had periods when we're fully manned in periods when the 2 autonomous fleets were operating within that quarter. So there's no real influence there to be noted as a key driver in that mix. But I'll just say it's better planning and better execution on demand. Consistent coal flow is what we want to see rather than a mad rush in Q4.

[Rahul Anand, analyst]

Got it. Okay. Just one question, which might have been answered with your acquisition presentation, but I haven't gone back to it. You talked about how Blackwater might be the first one that you'd be able to get another party interested who is an off-take partner. What is the current nature of the off-takes of the asset? I mean, do these -- are there long-term off-takes already in place? Or are some of these coming up for renewals that someone might actually be interested because if they've already got long-term off-takes in place, I'm trying to understand why they want to buy a stake?

[Paul Flynn, executive]

Yes. Yes. Look, I mean, this is not our asset yet, Rahul. So I'll speak in general terms around that. Look, historically, as you know, unless you were a joint venture partner, the industry isn't typified by long-term contracts. Generally, they have been evergreen. 1 year things that just roll year after year after year. Now this mine have been around a long time. And so it has had a long history of those 1-year contracts just rolling. And that's been fine, whilst the same people were all involved.

Now there's a change in ownership in pending, of course. And there are more interested parties in the market for this type of coal than there was in the past. And so a lot of this coal has traditionally found itself in the Japanese market. But the individual market has become a very big piece of the puzzle here. And so there is competition for this type of coal.

So the users of that coal historically are understandably keen to secure longer-term certainty for that volume, given that there are newer and big competitors in the market for the same material. So no, there's not long-term off-take arrangements that we're aware of that are coming to a conclusion. It's really just a reflection of the fact that this is a big player. It's been in the market for a long time.

The change of control clearly coming up, and there are new entrants into the market who are looking to secure long-term supply. And you've seen them play out with other transactions that cold space just recently, where, say, for instance, the Indian market has been very active in trying to secure more volume for themselves. And so that's the dynamic that we see playing out in this. And so we'll keep the process off with Blackwater because it's -- the inbound interest, as I said, is very strong.

And the Daunia situation, we'll review at a later date, given that it is interrelated with Winchester South. And any attempt to try and sell down a piece of that would necessarily want to contemplate the integration of the two. And that integration work is what we're embarking on now to look at all the opportunities to tailor those two sites together.

[Rahul Anand, analyst]

Got it. Okay. Look, I've got a few more, but I'll queue back in and come back.

[Operator]

Your next question comes from Chen Jiang with Bank of America.

[Chen Jiang, analyst]

A couple from me, please. Firstly, just -- well, BHP reported yesterday and increased the BMA cash cost. I'm wondering if your cost guidance provided in last October still intact for Blackwater and Daunia, could you please give us some color on how you are going to reduce the cash cost substantially in the next few years? From the current level, BHP guided USD 1 10 to USD 1 16 for the current financial year.

[Paul Flynn, executive]

Yes. Thanks, Chen. Look, that's a good question. We have limited capacity to answer that, obviously, given that we don't own the mine yet, and the guidance that they've given isn't Blackwater specific as I understand it. That is across their portfolio. So there's a blended outcome there. We're watching that very closely. And of course, the numbers that we gave when we announced the deal, it wasn't about next year's numbers. It's actually an average of the 5 years.

And so there's obviously lots of keen interest on our side as those numbers were reported, and we have some opportunity to get a glimpse into this along the way, given that we are the incoming owner. And so we are monitoring that closely. And -- but this is obviously, these assets remain in BHP's hands. And range, we have contractual arrangements in place to take account of changes in the operation. And to the extent that there are, we have some protections in that area. So we are keenly watching it.

But again, those numbers that we gave you back in October were averages for the 5 year. And our plans in terms of efficiencies and opportunities to drive these mines into a lower segment of the cost curve remain the same. But we're clearly watching this as it plays out. But it won't be long before we'll obviously get to have a look at this because as they have noted and we have noted, we expect this transaction to complete in early April. So it won't be long before we're seeing that.

[Chen Jiang, analyst]

Yes, sure, sure. Maybe just another follow-up on the BMA. BHP yesterday mentioned there's a significant increase in the plant maintenance across all the BMA assets and also increased prime stripping. Is that what you're expecting for Blackwater and Daunia as well? Will you take over the operations in 2 or 3 months' time-- early -- sorry, early April?

[Paul Flynn, executive]

Yes, that is consistent with our due diligence and our negotiations with them that they would be in that phase.

[Chen Jiang, analyst]

Okay. Okay. So you are expecting planned maintenance increase and increased stripping schedule from Blackwater and Daunia. Okay. Okay.

[Paul Flynn, executive]

So Blackwater just need to remind yourself here that their guidance is actually on a group basis, the EMA guidance, right? And so they have other big mines in different stages of their mine plan sequencing. And so whether a maintenance or stripping and so on, the numbers they've given you don't actually relate to our mines specifically or the mines that we have to own. Specifically, it's actually a group basis. So I think we just need to be cautious in terms of deducing the comments they give you on a group basis necessarily apply to Blackwater and Daunia.

[Chen Jiang, analyst]

Okay. Okay. All right. And maybe last question, Paul, please. Just in regards to the 20% sell down, it seems like you prefer to sell down the minority from Blackwater first. And then Blackwater and Daunia will, I mean, sell separately to different JV partners. Is my understanding correct? And then what is the current thinking around the use of proceeds from the sell down? Will this go towards reducing your keep on the balance sheet or return to shareholders?

[Paul Flynn, executive]

Yes. Thanks, Chen. Yes, look, I wouldn't be inferring preferences too much there either quite frankly. There is -- as we've noted in previous calls, there are different levels of interest in the assets from a joint venture participation perspective. And so some people have expressed interest -- their interest in both. Some people expressed the interest in one or the other depending on how much they know or how much they've procured in the past from one or the other.

All I'm highlighting from our perspective is the simpler answer is there's very good interest in Blackwater in particular, has been very strong interest in it. It is unencumbered by the need to study and adjacent undeveloped and soon, hopefully to be approved asset, such as the case of Daunia. And so that's just from a mechanical perspective is a little bit more -- there's a few more steps in the process that need to be considered.

And of course, we think Winchester South is a fantastic addition to Daunia, and gives that complex a 50-year life, but you need to map out properly the synergy opportunities and the value that you might seek from someone if you want to sell a piece. And so that's all I'm highlighting here, not too much a preference for -- it's just the practicalities of life that we're highlighting here in terms of how this would play out.

process goes obviously into the business and in terms of how we -- whether or not we are allocating that one direction or another. Obviously, as you would understand, we obviously have been to finance over the next 2 years that we need to address. And so we'll -- any money that comes into the consolidated coffers, we'll obviously be there to assure everybody that we're in -- we're meeting all our requirements.

[Operator]

Your next question comes from with Goldman Sachs.

[Paul Young, analyst]

It's Paul Young here. First question is on the operations, specifically on Narrabri. Paul, I guess it's another year, another geological sort of challenge. I guess, we've seen and intrusions and now washout. So I'm just trying to get a sense of on the go forward, particularly for, say, the next 1 or 2 years, can you just step through any other geological features that you want to call out? And also just remind us, please, of the timing around the longwall changes?

[Paul Flynn, executive]

Paul, good questions sitting next to me, and I'll hand pass to him on that one. I mean, look, this one, as we knew being obviously on the Eastern side of plank of the mine in terms of where the essentially washes out from economic extraction with a longwall that is, we always knew that there were going to be these types of washout features there. The challenge here for us is that -- in this instance, the behavior of the longwall or the behavior of the roof with the longwall is different from what we observed when we're driving the main gate and all the gate roads on either side of this thing.

So that -- we didn't see anywhere near the types of roof challenges as a result of driving that driver as we are seeing with the longwall. And so there's certainly a different behavior there. But it slowed things down, which is pretty annoying from our perspective. It's all manageable, but it's just annoying the productivity shifts that come with that.

[Ian Humphris, executive]

Yes. So Paul, I'll just jump in there. So I mean you referenced some of the historical challenges we've had. It's sort of in respect to the and those items that we had in the previous blocks, I mean, I think we've sort of run through what we're doing there with the amount of drilling we're doing now. I think we mentioned the term which is something we've developed with a number of other sort of technologies to ensure that the blocks don't have any major faults, which has caused us some problems before.

But better context, the washout, I'd call them small intrusions coming from the conglomerate that lies immediately over the top of the scene where we are at the moment. And as Paul said, I mean, on that eastern side, we need what we call the subcrop. So we're basically the starts to So as far as the sort of progression of the Blocks 204, 205, what happens is the scene starts to picking up and the conglomerate starts to move off the top of the coal.

So the impact of the sort of little fingers for one of a better term that are coming down into the coal scene from the conglomerate reduces as we head to the west. And I think you asked a question about the next move. We're anticipating that it will probably be in about Q3 FY '25.

[Paul Young, analyst]

Okay. Great. That's good detail. Maybe moving on to projects and the announcement of the CapEx reduction at around $100 million. Paul, any sort of thoughts around reassessment of projects and sequencing of projects, Vickery versus Winchester versus brownfields? And how you're thinking about sequencing projects? And as far as the CapEx cuts are concerned, I presume it's out of development growth and the other buckets that you released with your FY '23 results?

[Paul Flynn, executive]

Yes. Look, Paul, there's nothing magical that changed in our thinking around the projects themselves. There is a natural element of deferral of capital that comes from the slower production at Narrabri. And so thoughts around longwall replacement capital and so on defers out into the next year. So we can deal with that. Then the capital for early mining of Vickery, as we highlighted, that has gone in and doing well.

And so we're pleased with that. As I mentioned, there's some early signs of some coal, which we're exploring. But yes, there will be -- the first evidence of coal coming proper washing very at the back end late in this financial year. But in terms of CapEx, I mean, our CapEx, generally, as you know, we put a wide range out there, and we've underspent. And obviously, it's just -- I think everyone's just been busy in the priorities of just slid to the right to some degree.

Winchester, no change. Winchester, no material CapEx required there. And nice to see the Coordinator-General's report, that's fantastic. Let's see the full state-based approval hopefully soon. The federal EPBC approval obviously working in parallel, but still you've got to think between legal shenanigans and the Fed's approval process. You're still 2 years away from that.

That 2-year window is ideal in the sense that we want to study very closely the opportunity for integration at Daunia and Winchester South. And that's -- that will be a really important piece of work that we embark on once we take ownership here.

[Paul Young, analyst]

So you're saying basically, it's mostly Narrabri, just development.

[Paul Flynn, executive]

Yes, mostly Narrabri, slid to the right as a result of the slower -- slow rate. There's no point in ordering longwall just highlighted to you that the change out from the next is going to be further into next year. So look, all that stuff is will slide to the right, and we'll address that in the new year.

[Paul Young, analyst]

Okay. Great. Just last one, just on cash flow movements, and I saw the financial result. But as far as where the cash balance settle, you got the cash tax, you've articulated there and also the deposit. But anything else you want to call out from a cash flow move perspective, understanding that inventories came down, so obvious thing that working cap came down, just that cash balance was a little bit lighter than maybe some expected?

[Paul Flynn, executive]

Yes. Okay. Yes -- thanks, Paul. We have Kevin, who is at the bit to answer that one.

[Paul Young, analyst]

Yes, Mr. Kevin, just to bring into the mix.

[Kevin Ball, executive]

Thanks very much, Paul. I think the answer to that is that you've got receivables billed at the back end of December that's unwinding very early in January. So just the timing of sales to placement in December quarter.

[Operator]

your next question comes from Chris Drew with Jefferies.

[Christopher Drew, analyst]

Question on, I guess, the autonomous haulage sort of following up from the earlier comments. I guess you're getting towards the period that you've given yourselves for the assessment of whether to pursue or continue with this, any comments on kind of how that is shaping up? Are you sort of starting to get a little bit more confidence in what's happening there?

[Paul Flynn, executive]

Yes. Thanks, Chris. I mean -- as I highlighted earlier, I mean, the quarter itself had good signs from autonomous performance at periods, but then there are also times when we threw people back into the gear as well. So nothing really changed in that regard that we'd point to. But we do have some time remaining in terms of that consideration. But as you're pointing, we have put a time line on that, and there's not a limit to time. So we will come to conclusion on that relatively soon. But as I say, the quarter had rolled out consistent with the previous quarter as being a mix of both manned and unmanned activity, which is not what we want. Generally, we want to see more unmanned.

[Christopher Drew, analyst]

Great. And perhaps just a point of clarification on the CapEx reduction. Are you sort of suggesting best plan is just to take that CapEx reduction and roll it into FY '25? Or is -- would that be out of line with your expectations?

[Paul Flynn, executive]

That would be the most conservative position if you -- from a CapEx projection perspective. But I probably would suggest to you that it's not solely just to move to the right. There will be some further reevaluation of the CapEx profile next year.

[Operator]

Your next question comes from Glyn Lawcock with Barrenjoey.

[Glyn Lawcock, analyst]

Maybe if we could just -- can we just touch a little bit more on your cash position banks, and I heard what Kevin said about the working capital time wind in the second half. But you've got to pay BHP AUD 3 billion, probably in April and another AUD 400 million in stamp in cost costs for the advisers. So it's AUD 3.4 billion. You've only got AUD 3.1 billion in facilities, both cash and new debt facility you've put in place. So you're about 300 short. You only generated free cash flow in the last 3 months of AUD 50 million. So just how do you think about that funding shortfall? Or is there enough working capital unwind or what?

[Paul Flynn, executive]

Yes. Thanks, Glyn. Kevin want to jump into this. But look, we certainly feel comfortable about what we put in place here in terms of being meeting all our obligations. So I'm not sure about your math and the alignment of your math to our math. But yes, we feel comfortable about the cash flow generation of the business. There have been some one-offs in this last quarter the cash balance is a little less.

But the second quarter, I think -- sorry, the third and fourth quarter will -- third, in particular, will be obviously influential in terms of how that plays out. But we've got plenty of opportunities to -- if there's any unforeseen changes that we can make sure that we're in good order on the settlement date.

[Kevin Ball, executive]

I'm with you, Paul. Look, Glyn, I see your note that you dropped down about 9:30 this morning, and that was one of the points you put in it. But my answer for you would be that we've been through this thing for the last 7 months on where we think cash is going to be and where do we think we're going to get funding from. And we're confident we're able to settle this transaction together with the associated costs, and we've got the liquidity to do that.

So yes, the unwind of the receivables has taken place, and we've got a strong third quarter coming. So I'm busy with planning on integration and trying to stand systems up to make this thing take place on the 2nd of April.

[Glyn Lawcock, analyst]

Okay. No, understood. I mean, obviously, price can move around, but it's just the one funding facility you've got, the 1.1 you just put in place. You didn't hang on to the AUD 900 million facility that's gone?

[Kevin Ball, executive]

The AUD 900 million was a bridge, and the bridge was taken out by the 1.1. What I would say -- what I want to say to anybody on this call is that we were very pleased with the response from capital providers. And by that, I mean, you can assume that this was substantially oversubscribed. But we like the structure, we work through the thing. We're comfortable. We'll close this thing on the date that's coming.

[Glyn Lawcock, analyst]

And if I was to be right, I guess, you just get more facility in place to bridge whatever gap you've got between that and the sell down anyway?

[Kevin Ball, executive]

I reckon we'll just head down the path of closing this thing on the 2nd of April as we planned, so we're good.

[Glyn Lawcock, analyst]

Yes. And then I look forward to it. Look, just on the acquisition and the assets, I know, Paul, you have been taking control, and you've made a few comments about that already. But you've obviously got access to site and you've been up there. BHP said about 60% of their reduction was weather related, and the other 40% of the reduction was obviously the disposal of the assets.

It has been extremely wet both in the South and the North. Can you make any comments about how the mines with the rain? I know it from your observations being on site.

[Paul Flynn, executive]

Yes, look, we have been up and around the sites. We haven't been obviously living there, of course, Glyn, because they've got a business to run, and we want them to run that business right up to the day that we take ownership. So it has been wet. You're right to point that out. Generally, the effects there, in particular, haven't been so bad. I mean there's been a bit of at Blackwater, but we're tracking it.

And as I mentioned earlier, we have arrangements in place to -- if there are variations in the operational metrics at the time that we take ownership. So those metrics don't actually -- the risk of weather is not on us generally, it's on them. And so if that causes any of the metrics to be out of step with where we think they should be on completion, then there are protections in there to deal with those things. So we're watching it closely, of course, just because we want to make sure that the mines are operated basically in consistent with their budgets the way they said they wanted to.

And so that we take over a mine that's been operating in a way consistent with what their plans set out to be. Now we obviously -- we are not relying on their plans. We built up our own plans, as I've mentioned in previous calls, from scratch. And so -- but we want to know where the face positions are at a particular point so that we can actually then move on with our plans.

So look, I think they're in reasonable form. I think, as I said early in the previous call, I don't think it should be right that you -- that the group guidance have given on BMA is necessarily applicable to these 2 mines, in particular, because I don't think they are. In fact, I think, generally, they're doing okay.

[Glyn Lawcock, analyst]

Yes. And then just on the sell down, just as a final follow-up. Obviously, it will be an offshore buyer, so probably a little bit more scrutiny on the acquirer than being put on yourself buying the assets of BHP. How quickly do you think you could close something behind the 2nd of April? Is it a matter of a quarter? Or is it going to take a little while do you think?

[Paul Flynn, executive]

I think it will be driven by who the successful parties are, Glyn, because there's a range of different names in there from different jurisdictions. And there are -- some are wanting to move very quickly and others we know take time. And so there will be a variation. The key for us is, as Kevin said, we're very satisfied that we can -- we settle the deal. It doesn't -- we settle the deal on our own. So this is an action subsequent to that.

And so it's really about getting the right constitution or right constituent members of the joint venture if you're going to do that. We are keen to do that. So we think that model has served us well, and the interest is strong, so we should capitalize on that. And of course, the asset values themselves if one looks at even long-term met coal prices have improved. So it's a good opportunity for us to try and bring that to a conclusion.

I won't put a date on predicting when that would be. I think that would will be bound to be wrong one way or the other. So -- but it's very positive the inbound interest we've got, and we just like to capitalize on it. And as I said earlier, just the mechanics as to why we with wine and get this done. And then the other one, as I say, will be subject to a bit of study between the integration opportunities between Daunia and Winchester South.

[Glyn Lawcock, analyst]

And the 20% is a hard number, you won't go above it?

[Paul Flynn, executive]

It feels pretty good. I mean, if we get out of with interest, it's like the funding, if there is -- we're well oversubscribed there. So we took a little more. And so is this some -- is there -- can you draw the same analogy here in terms of that? 20%, I think, is about right for us. But if we were overwhelmed, we were open minded. But we said previously, 30% would be upper limit and we remain at that being up a little bit. But I think 20% is a good plan to see it.

[Operator]

That concludes our question-and-answer session. I'll now hand back to Mr. Flynn for closing remarks.

[Paul Flynn, executive]

Thanks very much, operator. Thanks all for your time. If there's any further questions, you know where to find us. We look forward to catching up with you in due course. I appreciate everyone dialing in. Thank you.

[Operator]

Thank you for participating. You may now disconnect.