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October 21, 2026 - Yancoal Australia said third-quarter cash rose by AUD 340 million as stronger coal prices, disciplined cost control and steady operations helped offset lower production tied to planned mine work and geological issues. The miner also completed its USD 1.85 billion purchase of an 80% stake in the Kestrel coal mine, a deal that expands its exposure to metallurgical coal. Shares were last at $5.93, down 1.82% from the previous close of $6.04. Key Takeaways
Company Performance Yancoal’s third quarter showed a mix of operational pressure and financial resilience. Production was lower than in the second quarter because of a planned longwall relocation at Moolarben and difficult geological conditions at Ashton. Even so, the company said year-to-date output remains ahead of last year’s record pace. The quarter also marked a strategic shift. Yancoal completed its acquisition of an 80% interest in Kestrel, a premium metallurgical coal mine in Queensland. The mine adds steel-making coal exposure to a portfolio that has been dominated by thermal coal. Management said Kestrel is already performing well and will be integrated into the group over time. The company’s operating profile remains broad, with major assets in the Hunter Valley, Moolarben, Middlemount, Yarrabee, Ashton and now Kestrel. Management said this mix gives it flexibility to respond to changing market conditions and to optimize product blends for customers. Financial Highlights
Earnings vs. Forecast No EPS or revenue forecast was provided alongside the quarterly update, so a direct comparison with analyst expectations is not available. The company’s reported operating data, however, points to a solid quarter. Cash generation was strong, realized prices were favorable and the balance sheet remained conservative even after the Kestrel deal. The most important financial signal was the AUD 340 million rise in cash during the quarter. Management said that increase came despite lower production, which suggests pricing and cost control more than offset the volume decline. The company’s financial strength is further evidenced by its balance sheet position—according to InvestingPro data, Yancoal holds more cash than debt and maintains a current ratio of 2.75, providing substantial liquidity cushion. With a market capitalization of $5.53 billion and a dividend yield of 3.05%, the miner has remained profitable over the last twelve months despite sector headwinds. In that sense, the quarter appears operationally strong rather than weak, even without a formal earnings surprise to measure. Market Reaction The stock was last down 1.82% at $5.93, compared with a previous close of $6.04. That puts the shares closer to the lower half of their 52-week range of $4.76 to $9.06. Despite the modest decline, the stock has delivered a 25% return year-to-date. InvestingPro analysis suggests the stock is currently undervalued based on its Fair Value assessment, placing it among opportunities on the platform’s most undervalued stocks list. For investors seeking deeper analysis, a comprehensive Pro Research Report is available, transforming complex data into clear, actionable intelligence. The move was modest rather than severe, suggesting investors were not alarmed by the operating update, but also were not fully rewarded by it. One possible reason for the muted reaction is that the quarter contained both positives and negatives. Cash generation and stronger coal prices were encouraging, but lower production, port delays and the added complexity of the Kestrel acquisition may have limited enthusiasm. The absence of a clear earnings beat may also have reduced the immediate upside in the shares. Outlook & Guidance Yancoal kept its full-year 2026 guidance unchanged. It still expects attributable saleable production in the upper half of its 36.5 million to 40.5 million tonne range. Cash operating costs are expected to land at the upper end of the AUD 90 to AUD 98 per tonne range, mainly because of higher diesel prices. Capital expenditure is guided at AUD 600 million to AUD 750 million, with less than AUD 400 million spent year to date. Management said Q4 production should be stronger than Q3, helped by Moolarben’s longwall returning to regular production, solid open-cut performance across the portfolio and the first earnings contribution from Kestrel. The company also said recent benchmark price gains have not yet fully flowed into realized pricing, leaving room for further improvement in coming quarters. Yancoal maintained its dividend policy of paying 50% of NPAT or 50% of free cash flow, whichever is higher. The company’s ability to sustain this policy is supported by its strong financial position—InvestingPro assigns Yancoal a "GOOD" Financial Health score of 2.97, with particularly strong cash flow metrics. The minimal debt-to-equity ratio of just 0.01 provides flexibility even after the Kestrel acquisition. Management said the Kestrel acquisition and related debt do not change that policy. Executive Commentary Sharif Burra, chief executive officer: “Despite lower production due to planned longwall activities, our cash balance increased by AUD 340 million during the quarter.” He said the result reflected stronger realized pricing, disciplined cost management and continued operational momentum. Burra on Kestrel: “Kestrel is a high-quality, long-life metallurgical coal asset that strengthens our portfolio and increases our exposure to premium steel-making coal markets.” He said the mine is a meaningful step in the company’s growth strategy. Kevin Su, chief financial officer: “We have done all the simulation in our modeling to make sure the current guideline of Yancoal’s dividend ... is not compromising that guidance.” He also said the company’s existing portfolio has no interest-bearing liabilities and that overall gearing remains mild even after the acquisition. Risks and Challenges
Q&A Analysts focused heavily on Kestrel, asking how the mine will be managed, what its production profile may look like and whether the acquisition could trigger contingent payments. Management said it intends to run Kestrel like the rest of the portfolio and noted that the mine has been performing well since the takeover. Questions also centered on capital spending, debt and dividends. Yancoal said it does not provide multi-year capex guidance and will give more detail in February. It also said the dividend policy remains intact despite the new acquisition facility. Another area of interest was the gap between production and sales. Management pointed to maintenance and disruptions at Newcastle port, as well as queues at Gladstone, which delayed shipments into the next period. The company said those timing effects should normalize over time. Finally, investors asked about the Moolarben open cut 3 extension. Yancoal said the project is expected to go to the Independent Planning Commission within one to two weeks and would extend the mine’s life rather than create a major step-up in output. Full transcript - Yancoal Australia Ltd (YAL) Q3 2026: Conference Moderator: Good day, and thank you for standing by. Welcome to Yancoal third quarter production report. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you need to press star one and one on your telephone. You will then hear automated message advising your hand is raised. You can also submit your questions via the webcast at any time during the presentation. Please be advised that today’s call is being recorded. I will now hand the conference over to your first speaker today, Mr. Brendan Fitzpatrick. Thank you. Please go ahead. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thank you, Desmond, and thank you to everyone joining us for Yancoal’s briefing on the third quarter production report. We have several members of Yancoal’s executive leadership team on the call to review the quarter and participate in the question and answer session. The commentary provided today is based on the quarterly production report released on the Australian Securities Exchange and the Stock Exchange of Hong Kong yesterday, the 20th of October. All financial references in this webcast are in Australian dollars, unless otherwise designated. I will now hand over to our Chief Executive Officer, Sharif Burra, to provide the quarterly highlights. Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: Thank you, Brendan, and welcome everyone. The third quarter was an important period for Yancoal, marked by the completion of the Kestrel acquisition, continued operational discipline across our portfolio, and stronger realized pricing, supporting a significant uplift in our cash position. On the 1st of October, we completed the acquisition of an 80% interest in the Kestrel coal mine. Kestrel is a high-quality, long-life metallurgical coal asset that strengthens our portfolio and increases our exposure to premium steel-making coal markets. It is a meaningful step forward in our growth strategy, and we look forward to working with our joint venture partner, Mitsui, and the Kestrel workforce as integration activities progress. Earnings from Kestrel will commence this quarter. Despite lower production due to planned longwall activities, our cash balance increased by AUD 340 million during the quarter. This reflects stronger realized pricing, disciplined cost management, and continued operational momentum across the business. Kevin will expand on the financial position and guidance later in the call. Turning to production. Managed operations delivered 16.6 million tons of run-of-mine coal and 12.4 million tons of saleable coal during the quarter. Production was lower than the second quarter due to the planned longwall relocation at Moolarben and challenging geological conditions at Ashton. Importantly, Moolarben’s longwall returned to regular production in September, providing a foundation for improved output in the December quarter. Across the open cut portfolio, Mount Thorley-Warkworth, Middlemount, and Hunter Valley operations all delivered strong performances, and year to date, we are tracking ahead of last year’s record performance. Looking ahead, stronger production in the December quarter, continued support from favorable coal market conditions, and the commencement of earnings from Kestrel are all constructive for our full year performance. Normally at this stage, I would hand over to David Bennett, our Executive General Manager Operations, to provide further detail on operational performance and safety. However, David is attending to other matters today, so I will cover these topics. Safety remains a core focus across all sites. Our total recordable injury frequency rate ended the quarter at 7.14, compared with 7 at the end of June. While still below the industry-weighted average, the recent trend reinforces the need for continued targeted intervention activities to strengthen safety performance. Operational performance during the third quarter was broadly in line with our expectations. The planned longwall relocation at Moolarben was the primary driver of lower production relative to the second quarter. Across managed operations, we produced 16.6 million tons of run-of-mine coal and 12.4 million tons of saleable coal. Moolarben completed the longwall relocation with open cut operations and the coal handling and preparation plant performing strongly throughout the quarter. The longwall recommenced production in September, positioning the site for increased output in the December quarter. Mount Thorley-Warkworth delivered higher run-of-mine production, supported by strong mining fleet performance and dragline productivity. Saleable coal production remained consistent with the prior quarter. Hunter Valley operations maintained strong momentum with run-of-mine production exceeding our forecast and coal handling and preparation plant performance supporting consistent saleable coal output. Middlemount delivered improved production supported by strong mining performance and favorable yields. Yarrabee delivered steady production with continued focus on coal exposure and mining optimization. Ashton’s production was significantly lower due to challenging geological conditions in the longwall roof. Operational focus remains on safely managing strata conditions and supporting future production continuity. With Moolarben’s longwall now operating and strong open cut performance across the portfolio, production in the December quarter is likely to be stronger than the September quarter. Kestrel produced 6.3 million tons of ROM coal and 4.8 million tons of saleable coal on 100% basis in the 9 months to the end of September. We receive our 80% interest from the 1st of October onwards. The operation continues to perform well, resulting in the longwall relocation being brought forward, which will affect coal production in the back end of the fourth quarter. I will now hand over to Mark Salem, our Executive General Manager, Marketing Logistics, to provide commentary on the coal markets. Mark Salem, Executive General Manager, Marketing & Logistics, Yancoal Australia Limited: Thank you, Sharif. Attributable sales were 9.0 million tonnes, lower than the second quarter due to reduced saleable production and the timing of shipments. Thermal coal markets strengthened during the quarter as geopolitical tensions, supply disruptions, and weather-related constraints tightened seaborne markets. High liquefied natural gas prices reinforced coal’s competitiveness in the global power generation mix. Demand across Asia and Europe remained resilient, with coal-fired generation supporting energy security and cost management. Australian producers benefit from favorable operating conditions and strong export performance. Against this backdrop, pricing for lower energy thermal coal strengthened relative to higher calorific value products, reflecting increased buyer preference for Australian supply amid uncertainty surrounding Indonesian exports. Thermal coal indices increased during the quarter. The API5 index averaged 99 USD per tonne, up 3% from the second quarter. The Newcastle 6,000 index averaged 136 USD per tonne, broadly unchanged from the second quarter. Metallurgical coal markets also strengthened. Chinese steel producers increased imports ahead of the seasonally stronger consumption period, while domestic supply constraints and export disruptions in Russia and Canada further tightened seaborne availability. Metallurgical coal indices moved higher. The Platts Low Vol PCI index averaged 180 US dollars per tonne, up 12% from the second quarter, and the Platts Semi-Soft index averaged 149 US dollars per tonne, up 4%. Demand across major steel-producing regions remained broadly stable, with resilient productions in China, Japan, and Taiwan partially offsetting softer conditions in India and South Korea. Our realized prices increased during the quarter. Thermal coal averaged AUD 160 per tonne. Metallurgical coal averaged AUD 229 per tonne, and our overall realized price averaged AUD 170 per tonne. Recent benchmark price increases have not yet been fully reflected in realized pricing, and further uplift may flow through in subsequent quarters. I will now hand over to Kevin Su, our Chief Financial Officer, to address the financial position and guidance. Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Thank you, Mark. As Sharif noted, our cash balance increased by AUD 340 million during the quarter. This reflects stronger realized pricing, disciplined cost management, and a continued operational momentum across the business. The cash balance benefits from favorable timing of payments and receipts, unlike last quarter when the timing was unfavorable. There was also a positive impact from unrealized foreign exchange gains on our US dollar cash holdings. We completed the Kestrel acquisition on the 1st of October. The upfront cash consideration of $1.85 billion US was funded through a combination of available cash and initial utilization of the $1.2 billion US five-year syndicated acquisition loan facility. Payment of the upfront consideration, partially in the $40 million US dollar deposits and other provisional adjustments for the net debts and working capital. Our $200 million US dollar committed working capital facility remains undrawn. Our operational guidance for 2026 remains unchanged. Attributable saleable production is likely to be delivered in the upper half of the 36.5 to 40.5 million tonnes range. Higher diesel prices have returned as a cost headwind, placing operating costs towards the upper end of the guidance range. Cash operating costs should fall towards the upper end of the range of AUD 90 to AUD 98 per tonne. Capital expenditure will be skewed to the fourth quarter, with less than AUD 400 million spent year to date. Full-year capital expenditure should fall within the guidance range of $600 to $750 million. Stronger realized pricing, favorable market conditions, and the commencement of the earnings from Kestrel are constructive for our financial performance in the final quarter of 2026. I will now hand it back to Brendan to coordinate the question and answer session. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thank you, Kevin, Mark, and Sharif for outlining the drivers of our third quarter performance. We will now move to the question and answer session, starting with questions from the phone, then moving to questions submitted via the webcast. Desmond, could you please initiate the phone question process? Conference Moderator: Thank you. As a reminder, to ask questions on the phone, please press star one and one and wait for your name to be announced. There are currently no questions from the phone line. Please continue. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thank you, Desmond. I will come back to you shortly to check again. In the meantime, we will start with some of the webcast questions. Unsurprisingly, Kestrel is featuring in a number of the questions submitted so far. Whilst we did not have operational control through the third quarter, Kestrel will form part of the portfolio going forward. So let us look at some of the questions coming through on that topic. Something high level to start with. Will the Kestrel staff be managed by Yancoal or by a third party? Sharif, can you please elaborate on the operating structure going forwards? Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: Yeah, thanks, Brendan. We are currently in the process of integrating Kestrel into Yancoal. The intention is over time that it is operated similar to all of our other operations. We had the great benefit of being able to go up to site the first couple of weeks of ownership and get to meet the team and the people on site there, and very impressed with the culture, great management team, and certainly the mine was producing well. So the intent is through the integration process, to bring it into the Yancoal family and to run it as we do our other mines. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thank you, Sharif. Kestrel is an operating mine. It is in production. What can we say at this point in time, given the early stage of the integration process with regards to the production profile this fourth quarter and then going into the forward horizon? Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: Yeah, thanks, Brendan. The mine has been producing well. It certainly continued to produce well through the short period of time we have had it. There will be a longwall move brought forward as a result of their production profile, and that longwall move will be at the back end of this quarter. With regards to production profiles going forwards, we are currently working through the budget and five-year plan process, including the cash flow. We will be able to provide some of that information in terms of guidance at the end of this year. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Sharif. That leads into the next topic. With regards to an update on the cost and CapEx profile for Kestrel post-acquisition and any plans for expansion of production from the current level, is there anything we can say at this point in time, or will we have to wait for the full year results in February before we have any forward-looking commentary? Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: Yeah, look, we will wait until February. We are obviously working pretty diligently through some of the opportunities at Kestrel. We will take our time. It is a very high-performing underground mine. It is running very well. The intention through the integration process is to work closely with the team at Kestrel and build off the strong base that they have developed there together. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks. Delving further into the Kestrel acquisition and the various financial metrics, one of the questions coming through is asking for some insight into the various financial metrics regarding the acquisition. What was the ROI for this acquisition? Or how was it or how does it compare with Yancoal’s WACC or the assumed realized price for the Kestrel products? What can we say in regards to this? Perhaps, Kevin, I will turn to you to see what is available as an initial comment. Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Yeah. I probably going to just maintain the position as we announced the Kestrel transaction on 14th of April, the presentation we published in ASX and Hong Kong Stock Exchange. We do have a few simulated number there. However, the question asked about ROI, about a WACC, the expected return, and the price assumption, they were not discussed publicly. It is a very Yancoal internal assumptions. For that reason, I am probably going to just refer back to the presentation we posted previously. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Kevin. Quite understandable. I believe we have got one question coming through on the phone line. Desmond, I will turn to you before returning to the webcast questions. Conference Moderator: Certainly. We have a question from the line of Mark Charles Paterson from Bell Potter Securities. Your line is open. Please go ahead. Mark Charles Paterson, Analyst, Bell Potter Securities: Good morning, gentlemen. Hello? Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Hello, Mark. Mark Charles Paterson, Analyst, Bell Potter Securities: Good morning. Just obviously, Brendan, regarding the cash flow, which is what the market obviously looks at, and we have charted pretty much it is back to 2023. Obviously, in the third quarter, you had a strong met coal position and obviously price coming through there better than thermal. Obviously, that has been reversed in the current spot prices, obviously up API5 115 compared to 99, 150s for Newc. And obviously, we have now got Kestrel with the low ash, high coking coal price coming through. How should we look as a sensitivity on a percentage contribution going forward for each API5, Newc, and the met coal so we can sort of get an understanding of obviously sensitivities of where those prices are moving and obviously impact on the company? Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Okay. Mark, appreciate the appetite to understand the product mix going forwards. If we look at the product mix currently or pre-Kestrel, we have been fairly steady state, circa 85% thermal products and 15% metallurgical coal products being the Low Vol PCI and the Semi-Soft. In the April presentation pack, we put some pro forma charts in showing the product mix going forwards. Kevin, if you just want to highlight some of those numbers that we provided previously. It will be indicative. There will always be period-by-period variations in any specific timeframe, but it is a good reference to use at this point in time. Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Sure. As Brendan just mentioned, we have put in some high-level indicative numbers for the pro forma coking coal portfolio, which is going to be increased from 16% to 22% based on the 2025 number. In the previous communication, we also mentioned for anything other than coking coal, the thermal coal, we have API5, GCNewc. We generally follow the public statements as all the coal produced largely in Hunter Valley will be using GCNewc, and then all the thermal coal 100% produced by Moolarben, they are all thermal. They tend to take API5. Hopefully, those numbers will give you a high-level indication about how much percentage attributable to the coking coal API5 and the GCNewc. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Kevin. Mark, was that sufficient? Is there anything further you need? Mark Charles Paterson, Analyst, Bell Potter Securities: Just on the thermal, on that 85%, is that split more towards the API5 rather than over Newc? Because obviously API5 has been relatively strong in the last four to five weeks or so. Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: I think, Mark, if you look at the flow of coal from our assets, if you look at Moolarben, that is majority API5. That will give you a flavor of the materiality of the size of where that comes. Predominantly, the Newcastle Coalfield sites are Newc index. It will be reasonably close. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Yeah. One final observation is Mark Salem and his team do a great job optimizing the product mix. They use the blending capabilities across the different assets to best meet the market needs and the customer appetite. There is always some variation to the product profile as we look at the market conditions. Having mentioned that, Mark Salem, perhaps I could hand across to you to see if there’s any additional comment you’d like to make on how we’re seeing the current market conditions and how we’re adapting our product profile to suit those market conditions. Mark Salem, Executive General Manager, Marketing & Logistics, Yancoal Australia Limited: Yeah, sure. Thanks, Brendan. Look, it’s an ongoing exercise in terms of optimization of our revenue and our product mix. We’re continually working with the mine sites, in a very close way in terms of where significant price movements exist, how we modify the way we prepare the coal and the way we blend the coal, always in an attempt to optimize. That reflects back on the comment you made, Brendan, in relation to the blending and how coals can change from different categories, in relation to Mark’s comments about API5 or GCNewc. It depends also on the arbitrage that does exist and the markets available and how we prepare those cargoes. But, in essence, I think the comments that were made by both Kevin and Sharif should give Mark a good guideline of where those coals basically sit against approximate indices. The intricacies are always very delicate and very involved, but that’s probably a good guideline. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thank you. Mark Charles Paterson, Analyst, Bell Potter Securities: Sorry. Just one final question, one quick one. Just on the Kestrel price. Obviously, that is a low ash hard coking coal price, which I think when you announced the acquisition was 146.5. My understanding that is obviously a discount to the hard coking coal, which is 280. So it is above that 225 level where you start paying contingency payments over the top of what you paid already. Do you expect to occur in the fourth quarter any contingency price because of that price increase? Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Mark, based on what we have publicly announced, the contingent payments will be triggered on a full-year basis if the hard coking coal index is above $225 U.S. And this is on annual basis, so we are not able to simulate only based on Q4. We will need to look at the whole year, basically for the next 12 months to see the potential impact, Mark. Mark Charles Paterson, Analyst, Bell Potter Securities: Okay, perfect. Thank you. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Okay. Desmond, I do not see any other questions on the phone line at the moment. I will move back to the webcast. On that topic of cash movements, one of the topics coming up is the cash balance. We have people noting that in previous quarters we have put the end of quarter cash balance in the quarterly production report and observed that that was not provided for this third quarter period. What comment can we provide on the cash balance at the end of the third quarter and linking that back to the cash balance increase we did report being the AUD 340 million, please, Kevin? Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Yep. Thanks, Brendan. That is a very good question. Normally, we tend to always put a cash balance for the quarterlies. This time we intentionally not putting it as this might be confusing due to the settlement of Kestrel. From acquisition settlement funding schedule perspective, we need to start drawing the acquisition facility on 29th of September, and we also have a two-step settlement as there will be a better settlement internally for Kestrel as well. Those big cash movement might unfortunately confuse people if we are using that. That is the reason why when this quarterly was drafted, we intentionally tried to normalize these one-off items and focus on the operation cash movement, which is the AUD 340 million. Thanks, Brendan. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Kevin. Ideally, once the cash transactions and the debt profile is normalized, we can return to a reported cash balance at the end of the quarter as has been past practice. As noted, just was not practicable for this specific period. Speaking of cash balances, loans, and the like, we have a question here saying, "Now that we have taken on the $1.2 billion U.S. loan, how is the board balancing loan repayments against CapEx and dividends going forwards? Is the current dividend policy remaining in place, or will debt repayments take priority in the short term?" Perhaps, Kevin, again, one for you to provide some views. Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Yeah. The loan, we have not fully disclosed all the commercial details of the loan. We have done all the simulation in our modeling to make sure the current guideline of Yancoal’s dividend, which is 50% NPAT or 50% free cash flow, whichever is higher. After all this simulation, we are not compromising that guidance we previously communicated with the investors. We will keep the same discipline. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Kevin. I believe you were talking about some of those pro forma numbers that we provided for the debt position back in the April presentation. The indication was it was far from a stretched balance sheet. If anything, we had gone from having a lazy balance sheet to a reasonably utilized balance sheet. Perhaps a fair observation to make, but there is no urgency to quickly pay down the debt. It will be a matter of balancing the preferences. Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Yeah, this is correct. Also please bear in mind, Yancoal’s existing portfolio has no interest-bearing liabilities. With Kestrel, even with this AUD 1.2 billion acquisition facility, the overall gearing position is very mild. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Right. Earlier in the call, we did touch on the forward-looking projections, and we made the observation that a lot of the guidance and the outwardly or the forward-looking projections will come through in the February result, the full-year result in February. With regards to capital allocation and cash flow and CapEx, is there any indication on the CapEx spend on the multi-year horizon? If we look at it specifically in the September quarter, can we clarify what the September quarter spend was and where the funds would be allocated in the final quarter of the year, and does that include or exclude Kestrel for the fourth quarter CapEx profile? Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Thanks, Brendan. We have provided our guidance on CapEx on a full year basis, which is $300 million to $750 million. We have spent $400 million up to the end of Q3. We will basically still aiming to spend the other CapEx within the range. We do not do multi-year forward-looking guidance. We would encourage investors wait till February next year to look at the 2027 forward-looking CapEx guidance. The current guidance doesn’t include Kestrel. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Kevin. That’s worth clarifying. All the guidance numbers provided are exclusive of Kestrel, the production figure, the cash operating costs, and the CapEx. They were all set pre-Kestrel. We are mindful of that, and when it comes to the full year report, we’ll provide figures against the original guidance and clarify what is inclusive and exclusive of Kestrel on the full year 2026 performance. Going back to the topic of Kestrel and coal quality, there was a reference earlier to the benchmark price and the circa AUD 500 million of contingent payments. Could we please clarify which benchmark we’re referencing when we’re talking about those contingent pricing payments? Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Thanks, Brendan. As just mentioned, it’s the premium hard coking coal index, which we call it, and you can find this referenced in the announcement we made on 14 April. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Right. Kevin, am I correct to say that there is a price realization component as well? So it’s the index price and then a price realization factor that becomes relevant, our revenue generation, and therefore contingency payment. Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Yes, that’s a very good point. The USD 225 hard coking coal index price, what I mentioned is what is supposed to be the trigger. However, when we pay the contingent payments, we will need looking into the realization factor to figure out how much applicable to the Yancoal Kestrel portion. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Kevin. Turning back to operational specifics and looking still at Kestrel, being the newest asset in the portfolio, it’s where the lot of the interest is lying for the investors on the call. The longwall move that was mentioned in the fourth quarter, Sharif, can we give some indication on the utilization for Kestrel through the fourth quarter? Perhaps how many weeks the longwall move will take, how many weeks of production we anticipate. They’re asking for a projection on production from Kestrel, but I’m mindful that we don’t provide asset by asset production guidance. Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: Yeah, thanks, Brendan. Given the recent good production, the longwall move has come into this year. It will start in and around early December. It will run through into the early weeks of next year, and the longwalls ramp up and get away again. The only other thing I guess I would say is there is a step around in the next panel, which is a short move. But there are some good long panels. As most people would appreciate, longwall move frequency is related to panel lengths. If you have a look through some of the material previously provided, you will get a good idea of where the frequency lies of those panel lengths. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Sharif. One of the investors asking, when we provide our 2027 guidance, will there be separate guidance for Kestrel versus the rest of the business? Mindful that they are also asking about longwall moves. You have just touched on that. The reason for the question is there is a five-year plan later this year. Will we get five-year guidance in February or just annual guidance? I will make an initial observation there. Yancoal’s practice is one year of operational guidance on a forward-looking basis. One of the main reasons we do this is the assets are running at a fairly steady state profile. We do not have significant step changes in the production horizon over, say, the next five years. Fortunately, Kestrel is a similar asset. It is operating at a fairly steady state basis. Notwithstanding the longwall moves and the like at not only Kestrel, but Moolarben and Ashton, the combined production guidance at the group level is likely where we will be going forwards. However, we will evaluate all the guidance thought processes as we head into the next full year result in February. Still on the topic of Kestrel and the transaction. No doubt be one for you, Kevin. Could we clarify whether the Kestrel acquisition is expected to result in one-off, non-recurring accounting considerations? If so, will it be recognized in the fourth quarter of 2026? Potentially even can we clarify under which line item on the income statement? Do we have any sense for the magnitude of these one-off items if they are to occur? Kevin Su, Chief Financial Officer, Yancoal Australia Limited: Thanks, Brendan. We just completed Kestrel acquisition. The team and our consultant has been working on the acquisition accounting. There is one line, actually, we also shared previously, and happy to share this again, is the stamp duty, we need, just as a part of the transaction, going to incur, and we need to recognize and include them in our accounts. The valuation is being done, while we assume the valuation is between maybe around AUD 150 million to AUD 200 million, be conservative. Other than that, we haven’t foreseen any other accounting entry going to be caused by, or any significant loss caused by this Kestrel acquisition. But as said, we have to go through a proper process working with our consultant, work out all the acquisition account entries. Thanks. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Kevin. I’ve just about exhausted the webcast questions. Desmond, I’ll come back to you to see if there are any additional questions coming through on the phone lines. Conference Moderator: As a reminder, if you’d like to ask a question, you can press star one and one. There are currently no questions from the phone line. Please continue. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Okay. I have the final webcast question in front of me. If any participants would like to ask another question, I suggest you start typing. Otherwise, we’re moving to closing comments after this final question. What can we say about the relatively weak coal sales volume in the 3Q period, given it was below the sales volume produced during the quarter? What we’re looking at there is the sales volume was 9.0 million tons compared to attributable saleable production of 9.4 million tons. I’ll hand over to Sharif for comment. Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: I think as a first port of call, obviously the Moolarben longwall move, Moolarben underground coal will bypass. Obviously that’s a large driver of that. Mark Salem, happy if you have any further comments you wanted to add. Mark Salem, Executive General Manager, Marketing & Logistics, Yancoal Australia Limited: Thanks, Sharif. Look, very simply, we had a lot of sales and shipments that were in the queue at both the ports of Newcastle and Gladstone. Unfortunately, at the port of Newcastle, shiploader 10 was down for maintenance. Then we had an unexpected disruption to shiploader 9, 709, 710, 79 respectively. That resulted in two shiploaders being out, and that caused a bit of a queue to occur at the port of Newcastle, so we had quite a number of sales that actually sit. The sales have actually been made. It is just the timing of the actual shipments. Similarly at the port of Gladstone, which impacts our Yarrabee, there has been a queue evolving over the month of September, which results in a couple of shipments also slipping. The sale, we have not lost the sales. It is just a function of timing of when the sales will occur, and we are monitoring those queues very carefully through our year-end position as well. Thank you. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thanks, Mark. It is a good observation about the timing effect. If I look back to the quarter production report, we had 10.8 million tons of attributable production and 11.6 million tons of sales. The production and the sales always normalize over time. It is the periodicity and the reporting in a three-month period that tends to be the difference. Okay, and, Mark Jacobs, hopefully you are still online. We have got one final question coming through relating to the Moolarben, the reference here is stage 3. I assume it is the open cut 3 extension. What are the risks to having that extension signed, and any views on legal challenges or relevant conditions that people should be aware of? Mark Jacobs, Executive General Manager, Government Affairs & Approvals, Yancoal Australia Limited: Yes. Thanks, Brendan. The Moolarben open cut 3 extension project, we are expecting to get referred to the Independent Planning Commission within the next week or two. The department advises that it has finalized its assessments. I think that it is realistic to expect similar conditions on Scope 3 conditions to what were imposed on Hunter Valley operations. I will note that those are reporting obligations. They are not constraints. As far as the question of legal challenge is concerned, what I can say is that the application has been rigorously assessed by both our legal team, the department’s legal team in its assessment report, and will equally be assessed from a legal perspective from the Independent Planning Commission. The fact that there will be a public hearing means there is no risk of a merit appeal, but there is always a potential of a judicial review appeal if somehow everyone has made a legal error. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Okay. That is very useful, Mark. For the benefit of everyone listening in, it is worth clarifying that that open cut 3 that we are referring to is approximately 30 million tonnes of production. It would extend the production profile at Moolarben, but we are not talking about a significant step change in the production output at any point in time. That concludes all the questions on the webcast. I will hand over to Sharif for the closing remarks. Sharif Burra, Chief Executive Officer, Yancoal Australia Limited: Thank you, Brendan. At the three-quarter mark, Yancoal is well positioned going into the final quarter of the year. We have completed the Kestrel acquisition, strengthened our cash position, and maintained operational momentum across our portfolio. We are targeting increased production in the December quarter, looking for improved realized pricing, and aiming to keep our operating costs manageable despite higher diesel prices. We look forward to speaking with you again when we release our fourth quarter report in January. Thank you for joining us today. Have a great day. Brendan Fitzpatrick, Head of Investor Relations, Yancoal Australia Limited: Thank you. Desmond, could you please conclude the call? Conference Moderator: That concludes today’s conference call. Thank you for your participation. You may now disconnect your lines. |
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