Earnings Transcript for YAL.AX - Q4 Fiscal Year 2024

Operator: Good day, and thank you for standing by. Welcome to Yancoal Australia Fourth Quarter Report. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brendan Fitzpatrick, Investor Relations Manager. Please go ahead.

Brendan Fitzpatrick: Thank you, Maggie, and thank you to everyone on the call for joining this briefing on Yancoal's Fourth Quarter Production report for 2024. The company recently announced a CEO transition. Today, we have several members of Yancoal's executive leadership team to recap the quarter and participate in the question-and-answer session. On the call, we have Kevin Su, our Chief Financial Officer; David Bennett, our EGM Operations; James Collins, GM Marketing, Laura Zhang, Company Secretary; Mike Wells, EGM Finance, Mark Jacobs, EGM environment and External Affairs; and Sharif Burra, EGM, Health Safety and Sustainability. Regarding the CEO transition, as noted in the recent announcement, Mr. Yue has taken on the role of Acting CEO. Having been Chair of the Executive Committee and Co-Vice Chairman of our Board since 2023, Mr. Yue's leadership has directly contributed to the company's performance. Given his more than 20 years of experience in coal mining operations and management, he is an ideal person to lead the company at this time. We look forward to Mr. Yue's participation in future equity market engagement. This is the second time we have addressed the market since Yancoal's inclusion into the S&P ASX 200 Index last September. We welcome any new participants on the call. And of course, we welcome those of you who have joined us on prior calls. The commentary provided today is based on the quarterly production report published to the Australian Securities Exchange and the Stock Exchange of Hong Kong yesterday, the 20th of January. There is no presentation pack for the conference call. The Yancoal website holds past presentations for any participants who require additional information on the company. The fourth quarter capped a great year for Yancoal. I'll hand over to our CFO, Kevin Su, to review the highlights.

Kevin Su: Thanks, Brendan. I also welcome everyone joining us on today's conference call. As mentioned, it was a strong fourth quarter, which resulted in our full year ROM coal production increasing 4% to nearly 63 million tonnes and our annual attributable production and sales increasing by 10% and 14%, respectively. We hit the middle of our production guidance range with 36.9 million tonnes of attributable saleable coal production. When we report the 2024 financial results in February, we expect our cash operating costs to be around the midpoint of the $89 to $97 per tonne guidance range. The combination of high production and low costs added another $480 million to our cash position during the quarter. And we finished the year with a cash balance of almost $2.5 billion. Yancoal operates some of the best coal mines in Australia. This drives our business. And as a result, we currently have financial capacity to pursue corporate initiatives and make distributions to shareholders. We will be in a position to comment further on dividends after the Board meeting in February to approve the 2024 financial results. I'll now hand over to David Bennett, our Executive General Manager, Operations, to expand on the operational performance space.

David Bennett: Thanks, Kevin. Our total recordable injury frequency rate was 6.7 at the end of December. There was an improvement over the quarter. And although the rate remains below the industry weighted average of 9, we remain committed to improving the trend through targeted safety intervention activities. Throughout 2024, we targeted a second half weighted production profile. We finished the year with 2 strong quarters, producing near the limit of our mining permits, equipment capacity and our rail and port allocations. In fact, at Moolarben, the open cut mine reached its permitted production cap of 16 million tonnes of ROM coal before the end of the year. It was above average rainfall at times during the quarter and our mines in New South Wales and Queensland encountered some weather disruptions. However, in most cases, the rain impacts on production were modest due to past investment in water storage and handling capacity. During the quarter, our mines produced 17.3 million tonnes of ROM coal, 13 million tonnes of saleable coal on a 100% basis and 9.7 million tonnes of attributable saleable coal. These volumes were almost identical to our third quarter performance. ROM coal production was up at all mines, except for Moolarben, which reached a total production cap. As Kevin mentioned, our full year attributable saleable coal production increased 10% to 36.9 million tonnes. The production rate averaged almost 10 million tonnes per quarter over the second half. This was a tremendous effort from all of our people and demonstrates what our assets can achieve when operating with limited disruptions. The 2 Hunter Valley mines, MTW and HVO had minimal weather delays and increased productivity, particularly at HVO, thanks to increased haul truck utilization. The 2 Queensland mines, Yarrabee and Middlemount were more impacted by wet weather, but still matched or exceeded the previous quarter production. The performance at Yarrabee was particularly encouraging given the geotechnical conditions and constrained mining conditions it faced earlier in the year. I'll now hand over to James Collins, our General Manager of Marketing, to provide highlights on the coal sales and coal markets.

James Collins: Thank you, David. Our attributable sales volume was 10.4 million tonnes with a typical mix of thermal and metallurgical coal products. The sales volume was 0.7 million tonnes more than the saleable production after we sold down some stockpiles to meet customer demand ahead of the northern hemisphere winter. Unfortunately, it is mild winter so far, resulting in demand below usual levels. Geopolitical tensions created some volatility in the coal markets, but ultimately, there was good supply from most exporting countries and soft demand. Compared to the prior year, Australian thermal coal exports were up 2% for 2024. Major export countries, except for Russia and Colombia also increased export sales compared to 2023. Across major coal importers, imports were up year-on-year by 13% into China, by 4% into India and 10% across Southeast Asia, down 1% into Japan and down 14% into Korea due to increased use of biomass in the power generation mix. Consequently, the API 5 and GCNewc indices [indiscernible] were slightly down during the quarter. They averaged USD 88 per tonne and USD 138 per tonne, respectively. However, our thermal coal realized price increase of 4% to AUD 163 per tonne, we've lagged price components and a weaker Australian dollar-U.S. dollar exchange rate aiding the realized price. Shifting focus to the metallurgical coal markets, these were also stable, albeit at prices lower than 6 months ago. Steel market conditions remain weak, with global steel output down approximately 6% during the year compared to 2023. The average low-vol PCI price was impacted as its usage is more readily flexed in the steel production process. The average index price was down 10% compared to the third quarter. In contrast, coke production kept the average semi-soft coking coal index price steady through the quarter. The low-vol PCI and semisoft coking coal indices we referenced averaged USD 157 per tonne and USD 137 per tonne, respectively. Our metallurgical coal realized price declined 6% to AUD 242 per tonne. Our overall realized price was up 3% to AUD 176 per tonne for the quarter. Coincidentally, this was also our overall average realized price for the year. These realized prices were sufficient to deliver the robust cash balance Kevin described. I'll hand back to Brendan to coordinate the question-and-answer session.

Brendan Fitzpatrick: Thanks, James, and also thanks to David and Kevin for highlighting the drivers of a great fourth quarter performance. Delivering on production guidance and ending the year with $2.5 billion in the bank gives Yancoal an excellent platform to start 2025. We will now move on to the question-and-answer session. We'll start with questions coming through on the phone lines and then we'll move on to questions submitted via the webcast. Maggie, could I please ask you to initiate the process for questions via the phone.

Operator: [Operator Instructions] Our first question comes from the line of Wayne Fung from CMBI.

Wayne Fung: This is Wayne Fung. So my question is about the strategic direction going forward, given the change in top management, as the CEO. So are we going to pursue a growth strategy through M&A? Or will we probably resume a more stable strategy in the future?

Brendan Fitzpatrick: Wayne, thanks for the call. Thanks for having you on the call. It's good to speak with you. In terms of the company's strategy, we've very much got an established position. We're a leading large-scale, low-cost coal producer. We see natural opportunities in the coal sector. We're not limited to looking at coal assets. We're not even limited to operating within Australia. We'd certainly consider many scenarios going forward. Any decisions and strategy directions will be determined by the Board as has been the case up until this point in time. The change in the CEO doesn't have a material impact on the company going forward. We've got an extremely capable leadership team sitting around the table here and online, and we've got a very capable board. So between the top-down and the executive leadership up. We've got the capacity to pursue the strategic initiatives as directed by the Board. And as Kevin mentioned earlier, we've certainly got the financial capacity to consider scenarios going forward. So no change to the messages we've been giving in the past. We are capable, and we're considering many opportunities as we always have done.

Operator: Thank you. [Operator Instructions] I see no further questions at the moment. I will now pass back to Brendan.

Brendan Fitzpatrick: Thank you, Maggie. I'm looking at the questions coming through on the webcast. There are several which strike on similar topics and ask similar queries. I'll amalgamate and combine some of these questions in the interest of efficiency. I'll start with something at the operational level. and I'll direct it to David Bennett. We've just had a really strong fourth quarter, and in fact, the second half. And whilst we haven't given our operational guidance for 2025, which will come in the February result, as usual, what are we able to say in terms of the operation outlook, not just in the current year, but across the asset portfolio looking into the future, David.

David Bennett: Thanks for the question, Brendan, and to those online. In terms of the last 2 years of operational planning and performance on our mine sites, we've been recovering from the wet weather periods in 2021 and 2022. We've invested strongly capital-wise in equipment. We have good strategic plans in place to set our minds up to be productive, safe, reliable and cost effective into the future. Each year, we go through a budget process, which includes a life of mine valuation as well and that provides a good strategic direction for the business. In terms of the -- I guess, you'd say the operating conditions of our mine sites at present, all mines are productive, well resourced with the right equipment, the right people, the right processes. To ensure that we deliver on our budget plans for 2025 and into the future.

Brendan Fitzpatrick: Thank you, David. There are several questions coming through on the topic of dividend, dividend outlook, dividend policy, capacity for dividends into the future periods. Kevin, during the scripted comments, we had an introduction saying that we have some capacity for dividends. Are you able to expand on the company's policy and what we can say at this time ahead of the Board meeting?

Kevin Su: Sure. Thanks, Brendan. Same as what Brendan just mentioned about that the company strategy doesn't change. Same thing for dividend policy, it doesn't change. I can reiterate the policy again. We have this 50% NPAT or 50% free cash flow, whichever is higher. This is the guideline for the management to plan our dividend distribution. At the end of the day, dividend is the Board decision. So Board will meet in February to decide in this case in 2024 full year dividends. Also on dividends, this is something we -- just back to what Brendan just mentioned about the corporate strategy is a part of our capital management philosophy, basically balancing growth story with a good return to our shareholders. As Yancoal doesn't have any debt, so we don't really worry about the cash outflow to manage our facilities. As a result, it's very much to see how there is sufficient cash flow to manage both the growth opportunities and also our return to our shareholders, which with this $2.5 billion cash in the bank, we definitely are able to manage. Thank you.

Brendan Fitzpatrick: Thank you, Kevin. And there was just 1 clarification. The AUD 2.5 billion, not U.S. dollars. All of our financial reporting is typically in Australian dollars. Occasionally, we will reference U.S. dollars most often when we're talking about international coal prices as that current -- commonly reported in U.S. dollar denominations. There are several questions coming through on the topic of potential M&A, various scenarios being contemplated. I'll reiterate some of the comments I shared when responding to Wayne's question earlier. The company doesn't comment on processes, active or past, that we may or may not have participated in. We have said in the past that we're a large producer of coal. We had a thermal coal dominated portfolio, additional met coal could complement our thermal coal assets. We are a low-cost producer. We would be naturally looking at things that are margin accretive, cash flow accretive, all those metrics, which are relevant for a company of our scale. We don't need more production for the sake of increased output. We are arguably the second largest coal producer in Australia right now. We have said that we're not limited to coal. We would look beyond coal. We had a strategic horizon that runs for 15 to 20 years on our existing assets. And we would look to the transition of the energy market and global coal demand for thermal coal accordingly. But at this point in time, we make the same comment. We've got a very capable team. We look at lots of opportunities. As Kevin mentioned, we've got a lot of financial capacity, there's access to the debt markets. So we're very excited about what the company could do going forward, and we'll no doubt be guided by the Board and act judiciously as we have in the past. Turning to another topic. We see a few questions coming through, James, relating to the coal markets, something in particular, the media reported the transaction, Anglo selling its coal assets last year. Do we see any influence on the metallurgical coal markets coming through from change in asset ownership. Start with that one, please, James.

James Collins: Sure. I would expect that only where it would affect supply and demand, you would note that you would say that it impacts the price. So it's not necessarily a change in ownership would necessarily impact the price of the underlying commodities.

Brendan Fitzpatrick: And more generally, investors looking for comments about the coal price outlook for 2025. We've generally made the observation. We see markets relatively balanced but the observations coming through that the coal indices have been somewhat softer in the first couple of weeks of 2025. Is there anything that you can comment on the current coal market conditions please, James.

James Collins: Sure. So over the last few weeks here, there has been a softening of the market and presumably on the back of the warmer winter in Europe as well as a healthy supply. Going forward, the market forward curve does price in a little bit of contango which may [indiscernible].

Brendan Fitzpatrick: Okay. And for the benefit of those less familiar with the coal markets that contango being priced in is suggestive of what possible coal profile in the latter part of the year.

James Collins: So the contango is based where the prices are at a lower number than the forward prices. So the suggestion would be that the market expects there to be a little bit of a recovery and which could be for a variety of reasons.

Brendan Fitzpatrick: Thank you, James. It's fair to say that our usual view that seasonal effects, short-term fluctuations in supply or demand still the likely drivers that we're watching for over the current 12-month horizon?

James Collins: That's right. They will -- we expect, of course, there will be a continuation of seasonal changes and short-term changes to supply and demand, which, of course, will -- the price will continue to be volatile.

Brendan Fitzpatrick: Thanks, James. I saw 1 question here, which I'll direct to Mark Jacobs. Actually there are 2 on a similar topic. The outlook for mining permits in New South Wales, can we comment on our existing permit durations and any permits that require an extension to allow the operational life. And I believe there was also 1 that specifically touched on the HVO process, which we have seen comments on in the media.

Mark Jacobs: Thank you, Brendan. In terms of mining permits and mining permits in New South Wales is typically issued for 21 years, and they have rolling expiry dates, and they are extended as a matter of course while there is future improved operational opportunity in each of those assets, and we manage that process very closely across the portfolio of tenements. In terms of the more specific HVO question. The approvals on HVO modification application to extend the life of HVO North was lodged in December and was placed on exhibition. To be plain, that application is seeking some additional time to mine coal that has already been approved under existing approvals, and we do not consider that application to be controversial in any way. In terms of the longer-term mine life extension at HVO, the team is continuing to work on refining its mine plans and working closely with government with the expectation that a more fulsome application will be launched later this year.

Brendan Fitzpatrick: Thanks, Mark. Coming back to the topic of coal markets and coal pricing, James. There's an observation that the GCNewc price has been falling in recent times, while the natural gas price in Europe and the U.S. is rising. That seems to be somewhat different from past correlations between the energy markets. Is there any observation that we can share on the relationship between the different energy markets globally and how the various prices are moving at this point in time?

James Collins: Sure. So you would -- years gone by, typically, when the gas prices rose, it might make sense to switch power generation from gas to coal. If coal was able to produce the power at a lower rate [indiscernible] because there's fewer call plants. Generally, though, will have macroeconomic effects, which will affect the 2, and then you'll see them more in sync. But at the moment, there is healthy supply of the low ash material and demand has been seeing a little, cause the -- presumably caused the Newcastle prices to soften recently.

Brendan Fitzpatrick: And the next extension on that topic, any projection into forward periods, whether the relationship between the energy markets would be consistent with what we've seen in the past? Or would they somehow begin to change over time?

James Collins: Well, we don't project forward. But we do take a variety of inputs from the likes of providers of analytic and you will -- there will be changes, though, in the way that this transition in the generation portfolio across different countries, which, of course, will have some effects.

Brendan Fitzpatrick: Thank you, James. And on that topic of interrelation between commodity prices, there's an observation that the semi-soft coking coal price is now at or below the 6,000 energy coal, the GCNewc style indices. Do we have any concerns about what that means for the metallurgical coal market outlook in the steel markets.

James Collins: I presume that's reference to the spot indices for semi-soft coking coal which doesn't have many data inputs to rely upon. So I don't -- that doesn't carry much weight. The current semi-stock pricing, I'd expect to be consistent with what it's been in the past relative to hard coking coal. Overall, the comments that we made on the hard coking coal with the steel production, I think, still carry through.

Brendan Fitzpatrick: Thank you, James. Maggie, I believe we have a question coming through on the phone line. Could I hand back to you for a phone line question?

Operator: Yes. Thank you, Brendan. Just a moment for your next question, please. We have Peter Wang from China International Capital Corporation.

Peter Wang: Yes. Congrats on Q4 results. I have two questions for the management. The first 1 is that the Moolarben longwall move actually impacted the Q4 production output. How is this going to affect the company's production profile this year.

Brendan Fitzpatrick: Yes. We'll give David the opportunity to talk about both, the Moolarben performance and the longwall move.

David Bennett: Yes. Thank you for your question. Earlier in 2024, we had some unfavorable geological conditions within the development of the next panel that we're going into at Moolarben. So that caused some delay to the longwall once it finished the prior panel. That longwall is actually on relocation as we speak into that panel that it will commence later this month. So we expect going forward that production from Moolarben underground in 2025 will exceed what we did in 2024. Those geological conditions have eased and we expect 2025 to be a more normal year for the Moolarben underground operation.

Brendan Fitzpatrick: Thank you, David. And Peter, your second question?

Peter Wang : Yes. So -- and my second question is, like how much maintenance CapEx does Yancoal consider appropriate for every -- for annual.

Brendan Fitzpatrick: Sorry, Peter, could you please repeat the question for us?

Peter Wang : Yes. So how much maintenance CapEx does Yancoal consider appropriate?

Brendan Fitzpatrick: The CapEx profile. If you look at the CapEx profile for the last 2 years, we've been running somewhere between AUD 600 an AUD 800 -- AUD 600 million and AUD 800 million on an annual basis. That's been covering our regular sustaining capital opportunities and the various fleet replacement cycles and ongoing capital projects we've been working on. We haven't provided a CapEx forecast or guidance for the current year, but we have said that the activities of the past 2 years are likely to extend into the foreseeable future, that gives you some context for what we would potentially be guiding to when we put out the numbers in February.

Operator: There's no questions on my side.

Brendan Fitzpatrick: Thanks, Maggie. I've still got several questions coming through on the webcast. One of them is touching on the topic of the CEO transition and what we said in the announcement last week was very much giving you the insight into what took place. Our former CEO, David Moult has been highly effective and in the role for 5 years. He had seen us through the global COVID pandemic, as well as those years of heavy rainfall. After 5 years in the role, the recent holiday period provided the opportunity to reflect on the success the company has had and the strong position it is at this point in time where we're back to full operating profile and very competitive cash operating costs and an extremely strong financial position. Subsequently, David and the Board had discussions and the ultimate decision was he took the opportunity to retire and Yancoal is now well positioned to find its next CEO. In the meantime, we've got, as I mentioned, an extremely capable executive leadership team running the business and we look forward to informing the market in the future once we've got an update to provide on this topic. We've got a few follow-up questions on that topic of dividend. Kevin as much as we can say, do we have an expectation for distributions in terms of finals and dividend -- finals and interim dividends over the coming year. Any comment we can say, as you've already touched on it very much that's the Board's discretion.

Kevin Su: Thanks, Brendan. I noticed some comments on the web link. I can see a question related to the company skip 2024 interim dividend, which is actually a good example for us to say, we from the company perspective, we've been balancing and managing the dividend on full year basis. And then subject to the corporate initiatives and the strategic priorities. So, we -- back to the position career, we made it clear earlier about the company's dividend policy. We still stick on to the existing corporate dividend policy, and we will assess the dividend return to our shareholders basically assessing the full year performance. Yes.

Brendan Fitzpatrick: Thanks, Kevin. And there was a question clarifying some of the commentary and intent around potential corporate initiatives and in particular, referencing past transactions that took place in the marketplace and Yancoal's expectation for regulatory approval were it to participate. The one observation we make here is, we've got an ongoing working relationship with all the regulatory groups and authorities. If you took at face value media commentaries that Yancoal is involved in any particular transaction, it's worth bearing in mind that such work is time-consuming, expensive, requires a lot of resources and effort. The company would not pursue any such activities if I didn't believe it was in a position to be successful, ultimately, the company has been very discretionary in the past. We've made some great transactions. Most recently, the Coal & Allied transaction, Mount Thorley Warkworth and Hunter Valley operations into the portfolio, 2 of the 3 core assets, which drive our business. So through the pursuit of strategic M&A, we can drive the business forward. We've got a history of growth through corporate initiatives and expansion of operations and the expectation is, we will continue to look for those opportunities in the future. On the topic of production, David, we're seeing a question about potential volume increase for 2025. And I'll ask this first -- question first, and I'll come back to a question on cost. But perhaps we can give a response in the context of what we achieved in the past quarters and what we could reasonably achieve on a 12-month horizon. We're getting ahead of ourselves given that the actual production guidance for this year is still pending.

David Bennett: Thank you, Brendan. In terms of opportunity for higher levels of production, the short answer is that opportunity always exists. As we've spoken about today, we have great assets, which always provides the opportunity for more volume, but it's clearly not about volume for volume sake. We're about delivering value, and that may come in the form of additional volume. It may come in the form of improved coal quality. It may come in the form of cost savings, any one of those three areas. So we operate our mines to be productive. As I spoke about earlier, we set our minds up strategically to be safe, productive, reliable, cost-effective and profitable. If it makes sense to chase more volume, we will do that, but not just for volume's sake. It's got to be the right value decision and we look to make sure that our mines can deliver over the long-term, not just increase volume over a short-term period.

Brendan Fitzpatrick: Thanks, David. There's a second question on operations related to the free on board costs we operate at. As we've indicated in the quarterly report, we're likely to be in the mid end or the mid-range of guidance when we report in February. We were higher in the first half, it implies a lower operating cost in the second half. What could we say about how our operating costs compare to both the domestic peers and the international peers that are supplying into the international thermal coal markets.

David Bennett: Typically, Yancoal has always prided ourselves on being a low-cost producer. As Brendan spoke about early, we're one of the major, pure-play coal producers in Australia. And going to the point I made a moment ago, it's not about volume at any cost. It's about keeping ourselves low on that cost curve, as are possible, delivering the volumes that we commit to in our forward estimates and the result of those two basically derive the value and put our company in a healthy position today and going forward.

Brendan Fitzpatrick: Thanks, David. The topic of the dividend is coming up again, Kevin. In particular, there's just a request if we could reiterate what the current dividend framework is as set out in our constitution and perhaps link that to the comment about our cash position and how much cash we need to retain to operate the business on a day-to-day or an ongoing basis.

Kevin Su: Thanks, Brendan. Very happy to reiterate for the dividend in our constitution, our position or the Board position is about a 50% of net after tax profit or 50% of free cash flow, whichever is higher, this is our position in the constitution. And the management has been working on this position to propose the dividend plan. And then we want to just make sure the dividend is always a good balance between maximizing shareholders' value with a good growth strategy the company has been pursuing. And currently, the high cash balance of close to AUD 2.5 billion enabling Yancoal to pursue both priorities from a capital management perspective. I hope this clarifies.

Brendan Fitzpatrick : And perhaps an extension on the capital management. A comment on the availability of debt financing for Yancoal and how we might be able to utilize that under certain scenarios in the future.

Kevin Su: Thank you, Brendan. That's a good question. For Yancoal, our purpose is not to have zero debt. Our purpose is always about maintaining ability to acquire facilities from the market when it's needed. And we believe and we are very confident Yancoal probably is 1 of, if not the best company, a coal company in the market is able to raise such facilities. So we are absolutely confident to secure such a facility in combination with a great cash balance and with a strong view to maximize our shareholders' value.

Brendan Fitzpatrick: Thanks, Kevin. On the topic of corporate initiatives and opportunities for the company going forward. The questions come through is Board approval and ongoing risk for the company as we pursue our strategic initiatives? I'll reiterate what we said previously, Yancoal has ongoing dialogue with the various regulatory authorities. Of course, any transaction will be subject to the review and approval as required from such authorities, but we've been successful in the past. We would anticipate having good opportunities to participate in processes going forward. We don't see that there's any reason for Yancoal to be particularly concerned. We're an Australian company, Australian-headquartered, we've got strong management team and a demonstrated ability to operate assets effectively in this country. On the topic of production David, there was mentioned in your comments earlier that there was a production cap for Moolarben. Perhaps you could just clarify how production caps work, mining licenses and how we set up our operations to run.

Mark Jacobs: It's Mark Jacobs here. So every single mine approval in New South Wales is subject to an environmental impact assessment, and that environmental impact assessment is predicated on a peak production rate. And so every consent comes with production limits at each operation. Generally, the mine plans are calibrated to fall within that production cap because we pick up a production cap that optimizes the efficient extraction of the resource. The fact that Moolarben reaches production cap is an indication of the fine calibration between the mine life -- the mine planning within the production limits. I hope that answers the question.

Brendan Fitzpatrick : Thank you, Mark. On the topics of coal markets, James, I'll come back to you. There's a question coming through, we took -- and it's asking about a structural shortage of thermal coal coming, as we expected in our Q3 report. I'll touch on it first and say what we've had looked at previously is the likes of the analysis coming through from Wood Mackenzie, where we can see the demand profile for exported thermal coal reaching to a higher level and a high level further forward time frame than was previously anticipated. That view has been pushed out year by year. And we've also seen the potential for supply to deteriorate over time as a consequence of natural mine exhaustion as well as, I believe, increased domestic use, particularly in Indonesia. So James, the question is do we still see the potential for some sort of shortage in the thermal coal markets in the forward years?

James Collins: The analysts that tend to do the work with regard to that type of conclusion. I don't see much change in what their view is. They still see that there is going to be difficulty with the [indiscernible] to replace old ones. And the transition won't necessarily be as quick and so there will still be a requirement for thermal coal going forward. So their view does not -- is not really unchanged if you look at it, what it was 6 months ago or 1 year ago.

Brendan Fitzpatrick: Thanks, James. There's a question coming through on the topic of the CEO transition, asking what David Moult's role was in M&A work previously and how will his part of the work be distributed through this transition process. The observation here is we've got a very capable business development team headed up by our Chief Commercial Officer, Michael Ngo. That team remains in place. They do the lion's share of the initial analysis on any potential growth scenario. David, as CEO, provided a coordination point between the BD team and our Board and the rest of the executive team. As we touched on our acting CEO and current Chair of the Executive Committee, Mr. Yue has been in position since 2023, a very capable executive with a lot of mining experience. So I think we're very well positioned at this point in time to lean on the existing business development team, our acting CEO, our executive leadership group as well as the expertise on the Board. So between those parties we'll be able to readily accommodate any initiatives that we wish to pursue. On the topic of growth in M&A one of the questions coming through is how would we gauge an opportunity, what metrics we might use an implied rate of return on the debt or the equity we apply or other metrics which might be relevant. Given at short notice, is this something that you could comment on from the CFO's point of view as to how we would gauge and assess potential opportunities.

Kevin Su: Sure. Thanks, Brendan. First of all, definitely, there will be a hurdle rate as for any Board, this kind of decision will be made on obviously, an internal assessment basis. We just want to assure the investors Yancoal has a very robust M&A discipline and also a very robust capital management philosophy. And that's the reason why how we responsibly use the resources we have to maximize shareholders' value.

Brendan Fitzpatrick: Thank you, Kevin. I've got what's the final question at this point in time, it's on the Mount Thorley Warkworth exploration and studies and the expected mine life extension. So what this is referring to is the, I believe, the potential for an underground mine at Mount Thorley Warkworth. It's still very much in the study phase subject to review, approval, permitting and so on. If it was to progress, it would be about extending the mine life, not expanding the production profile in the short term. As such, would be undoubtedly looking at on an NPV style basis or something similar to gauge its likelihood of being a strong contributor to the company. But as mentioned, at this point in time, study is still progressing, and we'll update the market perhaps later in the year when there's something more definitive we can say on that particular initiative. I appreciate it. I amalgamated and combined several questions on the webcast. I have endeavored to cover all the queries as put through the management teams through the webcast platform. Maggie, I'll come back to you for final check on the phone lines. And if there is anyone on the webcast who is of the view that I haven't touched on their specific query, 1 last chance to put a question to me via the webcast. Maggie, over to you to check the phones.

Operator: This is the last chance. If you have any questions on the phone or telephone for a question. Thanks, Brendan. I don't see any questions on my end.

Brendan Fitzpatrick: Thank you, Maggie. I don't see any further questions coming through on the webcast. Kevin, could I hand back to you to make a few closing comments before we finish the call.

Kevin Su: Thanks, Brendan. And thanks to everyone for making the time today to join us on Yancoal fourth quarter call. I want to take the opportunity to reiterate a few key messages. First, as Brendan just mentioned, we have a very capable team of senior leaders that will ensure continuity and stability of the operations in 2025. Second, we aim to deliver on our guidance every year, just as we did in 2024. We have some of the best mines in the industry, and we are proud of our ability to operate the mines with comparably low cash operating costs. Third, the scale and quality of our assets drove the financial performance. We added $480 million to the balance sheet in the past 3 months and hold close to AUD 2.5 billion. This gives us the financial capacity to pursue corporate initiatives and make distribution to shareholders. Ultimately, dividends are determined by the Board, and we will be in a position to comment further after Board meets in February. We look forward to speaking with you again next month after we release our 2024 financial results on February. Have a great day. Thanks.

Brendan Fitzpatrick: Thanks, Kevin. This concludes the call. Maggie, could I hand back to you to end the webcast.

Operator: Thank you. Thank you, everyone, for coming in today's conference call. This ends the conference. You may now disconnect. Thank you.