Yancoal Australia Stock

Good day, and thank you for standing by. Welcome to Yancoal First Half 2026 Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Brendan Fitzpatrick, Investor Relations Manager. Please go ahead.

Thank you, Maggie, and thank you to everyone for joining this briefing on Yancoal's first half 2026 financial results. We have several members of Yancoal's executive leadership team to recap the first half performance and participate in the question-and-answer session. Commentary provided today is based on the first half 2026 financial results and associated announcements published to the Australian Securities Exchange and the stock exchange of Hong Kong yesterday, the 19th of August.

Slides 2 and 3 contain notices and disclaimers relevant to today's presentation and the forward-looking statements it contains. Please make yourself familiar with the content of these 2 slides. Throughout the presentation, we use Australian dollars unless otherwise stated.

Sharif Burra, our Chief Executive Officer, will provide the introductory remarks for the first half results.

Thank you, Brendan. And welcome to everyone on the call. Those of you familiar with our presentation format may notice we've shuffled a few of the slides.

[Technical Difficulty]

Thank you, and apologies, everyone. Keeping our workforce safe is always our first priority, which is why we've already taken action to tackle the recent deterioration in the TRIFR statistics. We've implemented targeted safety intervention activities to correct the safety statistic trend. And pleasingly, we have seen improvements in July.

Earlier this year, we published our AASB S2 sustainability report. We since commenced work on a climate transition plan to strengthen our climate resilience and support the Yancoal P4 Sustainability Strategy. We're developing our Scope 3 data collection and calculation methodology to ensure we're ready for mandatory disclosure obligations next year. Our P4 report provides an annual update on sustainability activities, including progress to deliver the company's P4 Sustainability Strategy. The 2025 P4 Report is available on the Yancoal website.

During the first half of the year, we delivered another great operational performance. ROM coal production was 32.5 million tonnes, and our attributable saleable coal production was 19.8 million tonnes. This was a first half production record for Yancoal. We're on track to deliver in the upper half of our production guidance and set a new annual production record this year. Our cash operating costs were $96 per tonne.

Given the widely discussed impact on diesel price resulting from the events in the Middle East as well as broader inflationary factors, our people have done an exceptional job to keep cash costs under control. Our overall realized selling price for the half year increased to $154 per tonne giving the implied cash operating margin of $42 per tonne after government royalties. The record production and higher realized price lifted revenue by 13% to just over $3 billion. And our operating EBITDA increased 29% to $767 million at a 24% margin.

The operating profit before tax increased 42% to $328 million, but our statutory profit before tax was $56 million. This was due to the impact of nonoperating items on our profit, which Kevin will explain shortly. The company retains a strong balance sheet with $2.1 billion of cash and no external debt at the end of June. This was after distributing the 2025 final dividend and paying the USD 40 million deposit for Kestrel. Yancoal's portfolio of quality assets and financial discipline has allowed us to acquire an 80% interest in the Kestrel Coal Mine while continuing to return cash to shareholders. The Board has elected to distribute $92.4 million to shareholders at a $0.07 per share fully franked interim dividend.

I'll now hand over to Kevin Su, our CFO, to talk through the first half profit.

Thank you, Sharif. We added a slide to the presentation so we can help investors understand the nonoperating or accounting-driven items behind the profit we have reported in the first half. If you look at the light blue columns on the left and the right side of the chart, you can see the operating profit and the profit before tax, we reported in the first half last year. In most periods, these are similar with only minor accounting factors creating the difference between them. However, this was not the case for this reporting period due to $272 million of nonoperating items. We had a higher production and higher realized prices, which lifted operating profit by 42% to $328 million, as Sharif just mentioned.

However, after we account for the nonoperating items for the profit before tax, it's reduced to $56 million, and the profit after tax is $17 million. There are a few things to appreciate about these nonoperating items. These are all noncash items, except for the $20 million contingent royalty expense. So there is a very little impact on our cash flow and cash balance. The largest item is the $188 million hedge reversal loss. This is a noncash exchange rate translation loss on our previous U.S. denominated loans. The hedge reserve balance has now been fully recycled and reduced to 0. This item will only occur in the future if we apply similar accounting hedges to future U.S. dollar-denominated debt. The second largest item is a $49 million noncash impairment on the group's equity accounted investment in Middlemount. We hope this puts in context the profit before tax and the profit after tax we reported this half and why the underlying operation remains robust.

I'll hand over to David Bennett, our AGM operations to talk about operational performance.

Thank you, Kevin. Slide 8 summarizes the operational drivers behind our half year performance. As Sharif mentioned, we delivered a record first half performance, almost 20 million tonnes of attributable saleable coal production. Our cash operating costs increased just 3% to $96 per ton. The daily effort of everyone at all of our mines to keep costs contained along with higher production, limited the increase in cost per tonne. Mark Salem will provide more detailed commentary on our coal sales and the coal markets.

Turning to Slide 9. We see total ROM coal production on a 100% basis was 32.5 million tonnes. In prior years, we tended to have production weighted to the second half. Last year, we established a somewhat more consistent production profile across the 2 halves of the year and are looking to further improve that balance in 2026. This year, we prioritized overburden removal in the first quarter to optimize coal mining over the remaining 3 quarters. Even with this scheduling approach, the 67.3 million tonnes mined over the 12 months to the end of June was close to record performance. Attributable saleable coal production was 19.8 million tonnes, up 5% compared to the first half last year.

As I just mentioned, even having prioritized overburden removal in the first quarter, we were only just short of our best 6 months performance in the past few years. We have great operational momentum heading into the second half and are aiming for the top half of the production guidance range. Last year, we set 2 separate world records with our Liebherr R9800 excavators. At Moolarben, we set a world record for total material movement with 17.6 million bcm and at MTW, a second excavator set a world record for total material movement in a month of 1.75 million bcm.

Based on the first half output, HVO's R9800 excavator could potentially move around 17.9 million bcm this year and exceed the world record set at Moolarben in 2025. These performances demonstrate Yancoal's capability to operate at the highest industry levels. Sharing knowledge and best practices between our mines is improving our performance across all operations.

Slide 12 includes data we have used in the past. The charts display our 3 largest mines in the context of other Australian thermal coal mines. Total cash costs are shown on an energy adjusted basis to counter the influence of coal quality on the operating margin. We updated the slide to show the same data set 7, 8 months apart. May 2026 compared against December 2024. The scattering of mines on the chart and the industry averages have not changed materially. The key takeaway is the large-scale, low-cost mines have a competitive advantage. This is why we focus on maintaining our assets and operating them as we do.

Slide 13 shows our cash operating costs. As Sharif said, our cash operating costs were $96 per tonne in the first half. We continue to work extremely hard to keep our cash costs in check and to offset inflationary pressures, such as recently elevated diesel prices. The increase in the raw material category to $36 per tonne is mostly related to the higher diesel price increased production, mine plan optimization as well as equipment reliability and utilization, all contributed to combating cost inflationary elements.

As we have said in the past, we see our ability in keeping costs flat over the past few years as a great outcome relative to the sector, and this leads to the next slide. Turning to Slide 14. We demonstrate why keeping cash operating costs low is crucial. Our implied operating cash margin in the first half was $42 per ton. This chart shows the expansion and contraction of margins we have experienced over the past 5 years. The margin, while lower in recent years, remained strong. Combined with our scale of production, this drives the financial performance, which Mike Wells will cover shortly.

I will now hand over to Mark Salem, our EGM of Marketing and Logistics to cover the coal markets.

Thank you, David. Starting with the product mix on Slide 15. 84% of our sales were thermal coal with the balance in metallurgical coal. This product split varies a little between periods, dependent upon operational performance, which cost seems in production at the time, customer requirements and market optimization strategies. The 19.8 million tonnes of attributable sales matched attributable production, and this maintained our inventory levels. On the way to delivering this sales volume, Moolarben achieved a record figure for coal railings in June with around 2.1 million tonnes railed to the port. This was the first time the 2 million tonne threshold had been achieved by any mine that ships product out of Newcastle. It was a great collective effort by the site the logistics team and the marketing teams as well as our own rail provider.

Turning to Slide 16, we show our market split. We contrast both sales revenue and sales volume splits for the first half of 2026 against the first half of 2025. We continually optimize the revenue contribution of our various coal products to specific markets. China is a significant offtake partner, both on a volume and revenue basis. Customers in China tend to take a higher portion of our relatively lower energy content thermal coal whereas our Japanese customers purchased a significant portion of our higher calorific value thermal coal, low-vol PCI and semi-soft coking coal. Accordingly, it contributes the largest portion of the revenue we receive.

In Australian dollar terms, our overall realized price was $154 per tonne, up 3% from the first half of last year. This year, volatile energy markets have caused end users, traders and speculators to wait geopolitical risk factors against supply and demand fundamentals. In these market conditions, security of energy supply is increasingly important for many nations. The market conditions have also resulted in gas to coal switching across Japan, South Korea and Taiwan. At the same time, we see reduced supply from Indonesia, South Africa and Russia, with exports from these countries down 2% to 11% over the first 7 months of the year compared to the same period last year.

We promised our thermal coal against the Argus/ McCloskey API5 and globalCOAL Newcastle indices. Our realized price in U.S. dollar terms sits between the indices as shown in the chart. In Australian dollar terms, our realized thermal coal price was $143 per tonne for the first half up 3%. The typical lag between price indices and our realized price means we have yet to fully capture the benefit of recent spot market prices.

Turning to metallurgical coal markets. We observed a strengthening steel market and stable demand for metallurgical coal. It appears there has been a shift from demand-driven pricing to cost-based pricing with the marginal cost of supply now setting spot prices. In Australian dollar terms, our realized metallurgical price was $216 per tonne for the first half, up 4%. There are various groups providing forecast for international thermal coal markets. A theme we have observed over recent years is the ongoing revision of when coal demand will peak. Delays to projected coal dates for existing coal fire power generation combined with new facilities coming online, drive the evolving demand profile.

Since we last included this slide, we have seen a substantial uplift from the first half of 2025 in the short term and from 2028, the estimates mirrored 2025 assumptions estimating peak demand in 2029. One can conclude that this ever-changing profile indicates coal still has a significant role to play.

On Slide 20, we look at projections for seaborne supply over the next 10 years. Approval and financing challenges for new mines compound natural reserve depletion in the coming years. Many energy market participants now recognize coal still has a meaningful and ongoing role in the global energy mix, and there is potential for a supply shortfall in coming years. Compared with 12 months ago, less coal supply is forecast from the main export countries. This forecast is one that aligns with increased concern about the security of supply we are observing. In the seaborne metallurgical coal markets, demand from mature regions like Europe and Northern Asia are likely to decline over the next 15 years.

However, this is quickly being outpaced by growing demand from emerging economies like India and Southeast Asia, leading to a growth in total demand. In the seaborne metallurgical coal market, some supply growth is required over the next 15 years to meet this demand. Unless the additional supply entering the market has a total cash cost profile lower than the existing supply, it seems unlikely this situation should lift metallurgical coal prices in the forward years.

I will now hand over to Mike Wells, our EGM Finance, to cover our financial performance. Thank you.

Thank you, Mark. Starting with the key numbers on Slide 23. The combination of higher sales volumes and realized prices lifted revenue, operating EBITDA and operating profit compared to the first half of 2025. The profit before tax and profit after tax includes the nonoperating factors, which Kevin previously explained. The other element worth addressing is the 29% increase in operating EBITDA compared to just a 2% decline in the operating cash inflow. The primary driver is timing differences on net cash receipts from customers and payments to suppliers prior to the 30 June accounting date relative to the same time last year.

Overall, we retained a strong financial position with $2.1 billion of cash at 30 June, about half of which we expect to use as part of the cash settlement of the Kestrel transaction. The 2 charts on Slide 24 demonstrate the correlation between average realized price, revenue, operating EBITDA and operating EBITDA margin. The other element is the production profile, which, as David mentioned earlier, had a second half weighting in prior years but has been more consistent since 2025.

Looking at Slide 25, the operating EBITDA and operating cash flow profiles are well correlated, noting that the operating cash flows also include net interest and tax payments. However, there can be one-offs, such as the large tax payment in the first half of 2023.

I will now hand back to Kevin to cover the financial position and dividends.

Thanks, Mike. Looking at Slide 26, we can see the net cash position Yancoal has carried over the past few years. In April, we've announced the acquisition of an 80% interest of the Kestrel Coal Mine for upfront consideration of USD 1.85 billion with a further potential USD 550 million of contingent payments. We anticipate completion of the transaction at the start of October or perhaps earlier. At that time, we expect around half of the June cash balance will be utilized to partially fund the acquisition. We will take on debt to fund a remainder of the acquisition with gearing of approximately 15% to 18% on a pro rata basis.

Turning to Slide 27. We look at how Yancoal has rewarded its shareholders during the past 5 years. The directors have allocated $92.4 million to pay a fully-franked interim dividend of $0.07 per share. The dividend reflects our confidence in the underlying earnings, cash generation, liquidity position and the long-term financial strength of Yancoal. Maintaining dividends to shareholders while also completing the Kestrel transaction, demonstrates our capacity to fund growth and reward shareholders simultaneously. It is our disciplined approach to capital management over recent years that enables us to do both concurrently.

Slide 28 has our operational guidance for 2026. We are looking to carry forward our operational momentum into the second half and deliver attributable saleable product in the upper half of our 36.5 million to 40.5 million tons guidance range. Our guidance range for cash operating costs is $90 to $98 per ton and after allowing for higher diesel price this year, we expect the costs will be in the upper half of the range. With first half capital spend of $254 million, we have revised our capital expenditure guidance range down by $150 million to $600 million to $750 million. The reduction is mostly timing due to expenditure deferrals to 2027. We continue to balance production, product quality, efficiency metrics, cash costs and capital expenditure to maximize our performance.

I'll now hand over and back to Brendan to coordinate the Q&A session.

Thank you, Kevin, Sharif, David, Mark and Mark. As usual, we have included appendices and additional information for reference at the end of the presentation pack. We will now take questions from the phone line and written questions submitted via the webcast. Maggie, could you please start the process for questions from the phone line.

Yes. [Operator Instructions]

Thank you, Maggie. I do see some written questions via the webcast. I'll start with those and return to you shortly to see what is coming through the phone line. One of the first questions came in all direct to you. It's asking, what is the exact structure of the U.S. dollar-denominated loans responsible for the $188 million noncash translation loss -- and will that currency exposure be permanently unwound or restructured once the Kestrel acquisition closes?

Thanks. This is a very good question. Actually, for investors who is familiar with Yancoal accounts, $188 million hedge reserve recycling was actually booked and disclosed in the previous financial statements. And this is the very last piece in Yancoal's hedge reserve accounts, and that's why we made a statement the hedge reserve balance now is 0. This is basically due to Yancoal adopted hedge mechanism called accounting natural hedge. In other words, using U.S. dollar cash, our revenue generated in U.S. dollar cash to hedge our U.S. dollar loan exposure. As such, when the loan is repaid, then the booking rate difference will be kept in the hedge reserve accounts and will be recycled back into P&L when the loan maturity date expires. And that's exactly what happened for the current $188 million hedge loss.

For now, there's no debt outstanding in Yancoal book. And as just mentioned, hedge reserve now down to 0. In the future, if Yancoal take up new loan this might potentially happen, but can go either way, depends on the spot rate when the loan is repaid, but this will be for the future acquisition and the future loan exposure. I hope I explained the question.

Thank you, Kevin. But just for context, can you recollect, have there been inferences in the past where there was a positive nonoperating hedge reversal that we reported?

In Yancoal's history, we do have incidents, the hedge reserves become positive. However, given the current balance what you have seen, they all largely inherited from loan facilities 5 to 10 years ago. And back then, we were talking about a loan started when the Aussie dollar rates either AUD 0.95 or even close to parity. As such, the unfortunate accounting translation tend to be at a loss position, but if today, we take up a loan, the booking rates for the loan inception going to be at AUD 0.70 or AUD 0.71. Then if we look at the market fair value, if we believe the current level is market fair value, then the potential movement for the hedge reserves can be a lot more moderate.

That's good context. Appreciate that. Another question coming through from Jacob at Barrenjoey. Recognizes the strong result in the cost control, which appears to be outperforming peers in the coal industry. Question is, what the diesel cost assumption or what is the diesel cost assumption in our guidance? And how does that compare to spot diesel prices we are currently experiencing? And can we provide some cost sensitivity to diesel price for example, dollars per tonne unit costs relative to a $0.10 per liter move in the diesel price?

I'll turn to perhaps Mike Wells. This might be something that falls within your area of expertise to provide some comments. Can you provide some insight into the influence of diesel costs on our guidance and the sensitivity of the diesel price exposure, Mike?

Yes. Thanks, Brendan. David mentioned it in the comments on the way through where he referenced the fact that in the first half, there was a $4 increase in the raw material costs in our actual reported numbers and the majority of that increase was attributable to the increase in diesel price in the first half. Obviously, the price is moderated since then. So we see less of an influence in the second year. But as noted, we would still expect the increase in the first half to elevate our full year forecast.

In terms of the forecast -- just in terms of the forecasting, we use forecasting from various external sources in terms of what the market is expecting in the second half and so our guidance is framed around using sort of external market forecast for the diesel price over the remainder of the year.

Thanks, Mike. And can I confirm that last year, for the full year, diesel was approximately $7 per ton of direct costs within our reported $92 per ton?

Yes, that's right, Brendan.

And at the start of this year, when we originally set the guidance, we had effectively a similar diesel price assumption?

Yes, correct.

And therefore, if people look at diesel prices in the market, they should be able to work backwards to get some sensitivity from diesel price movements and the increase in costs we accommodated in the first half?

Yes.

Yes. Look, thanks, Brendan. It's Sharif here. The only other comment I would make is that our open cut mines proportionately use a lot more diesel in our underground mines. So you need to take into consideration the production profile of underground performance, which is largely electrified versus the open cut where diesel usage amongst the heavy earth-moving machinery is proportionately higher on that front.

Thanks, Sharif. Good observation. Maggie, I'll come back to you to see if there's any questions on the phone line?

I see no further questions at the moment. [Operator Instructions]

Okay. I'll come back again to check if any questions come through. In the meantime, question from Younes at Millennium. He is asking about the dividend policy. Makes the observation with AUD 22 million dividend for the interim results. It appears to be lower than 50% of free cash flow numbers. What can investors expect for the full year after the nonoperating costs we've incurred? And I'll add an additional component also bearing in mind the Kestrel transaction completion that we're working through. Who would like to take the initial comment?

I will talk about the dividend first. Yancoal's dividend policy has been quite consistent. We normally take the higher between 50% of NPAT with 50% free cash flow. And I noticed the comment was made about this is lower than the 50% free cash flow. I just want to explain actually why we do have our internal calculation to make sure we reflect the most accurate free cash flow from our operational accounts. And then the current dividend payment of about $0.07 per share is driven by better cash flow from that perspective. So we are very consistently following our dividend policy.

Thanks, Kevin. It is correct to say that the 50% reference we use typically is on a full year basis. So the interim is only partway through to the full year and the final dividend subject to Board discretion would ultimately determine the payout ratio for the full year.

That's correct. This is a very good point. When Yancoal management team proposed to the Board and the Board make decision, we not only look at the half year number, we only look at it from the full year perspective, what will be the most sensible driver to decide the dividend in the current year, as you would notice, we have a lot of nonoperating items. As a result, we tend to take free cash flow as the right benchmark. Thanks, Brendan, that's a good remark there.

Thank you. The next question from John at Easton Value. Since the deal to acquire Kestrel, have we been able to get a closer look at the mines operations? What can we provide in terms of commentary with regards to consistency of production compared to the past, the cost, the coal quality and demand from clients in relation to the coal products, looking to get an understanding of the Kestrel Mine ahead of integration into the Yancoal portfolio later this year?

Yes. Thanks, Brendan. Look, we're really excited about being able to bring a very good quality asset into the Yancoal family. The mine is well run, has good management, good operational practices. And we are looking the Yancoal as has been mentioned previously in the start of October, if not quicker. I think from what we've seen and our integration teams have been working diligently in terms of making sure we're ready to welcome cash flow into Yancoal. I think what I would say is we welcome a strong asset with good production performance coming into Yancoal.

Thanks, Sharif. And a follow-up question. The acquisition completion, what's the latest commentary on potential completion time line?

Yes. As I've said, we're aiming for the start of October, if not sooner.

Thanks very much. Another question from John at Easton Value. Are the management anticipating a stronger second half given hopes of resolution in Iran have not materialized, and we see a very low level of storage build of gas in Europe, suggesting that an even average Northern Hemisphere winter could result in strong demand for coal and gas prices getting pushed higher globally. Mark Salem, can you provide a view on what we're anticipating for the second half, bearing in mind that we don't explicitly give price outlook?

Sure. Yes. Look, I think in answer to that question, we have seen some gas to coal switching as I mentioned, happening in Japan, Korea and Taiwan. And we have also seen the market kind of rebalance itself from the issues in Hormuz. The volatility we're not seeing as drastic as we used to see it. So it would take a substantial shortfall of energy and that potential gas shortage in Europe would take away a lot of the Colombian South African coals out of the Asian market. And that in itself will then create a little bit of impetus to the GC Newc.

So the theory is correct if that was to happen. But you'll see the increase in the European indices appreciate quicker before the GC Newc reacts depending what happens in Asia.

Thank you, Mark. It's very helpful I don't see any questions coming through on the phone lines. I'll continue with the webcast. Another question from Jacob at Barrenjoey. A broad question. Regulatory environment in New South Wales somewhat improved, at least for brownfield expansion in our view. Given the importance of coal mining in local employment, Ashton, Mt Arthur, Magoua, et cetera, all coming off in the next few years and thousands of jobs to be lost permanently. In regard to the HVO extension project, which is going through IPC. Is that still on track for IPC determination this quarter and federal approvals in the fourth quarter?

I think the HVO element is probably the most interesting in that question. And Mark Jacobs fits no doubt, best placed to provide a comment on what's occurred at HBO with the IPC process. Mark, could I hand over to you for an update on what we've seen to date?

Thank you, Brendan. You're correct that the project is going through the IPC process. There was a public hearing held on the 16th, 17th and 22nd of July. Based on historical processes, we expect the IPC will likely make its decision by mid-September. That's the normal kind of cycle that the IPC will make its decision within. And we obviously are not going to speculate on the nature of that decision. We need to wait for the IPC to run through this process. But it is perhaps worthwhile also adding that both the New South Wales Premier and the New South Wales Resources Minister have made public statements reinforcing the importance of HVO to both the region and to the local economy.

Thanks, Mark. With that likely or potential IPC process in mid-September, are there subsequent steps or processes that are relevant for external observers?

The important one, as noted in the question, is the federal approval, which will -- is like -- we expect that to follow a relatively hot on the heels of the state government approval. It's a separate and parallel process. And then there are the conventional updates to management plans, all of which are business as usual activities and within HVO's control.

Thank you, Mark. Another question of financial nature. With the capital expenditure, we've made the observation $150 million reduction in the guidance range, primarily due to deferral of capital expenditure. Will the escalated spending drive up cash operating costs once Kestrel is integrated and perhaps more broadly, how is it the timing of the capital expenditure being determined?

This is Kevin. The deferral of $150 million CapEx into 2027 was just simply due to timing of some internal CapEx projects. There's nothing really special linked to all these deferrals. And then this is going to be just naturally become part of the 2027 budget for the CapEx. And then we will adjust our guidance accordingly. We don't feel this will have any implication with the Kestrel as the Kestrel will be separately assessed and then we'll be posting the acquisition, we will reassess the whole Yancoal Group CapEx and issue guidance accordingly with Kestrel to be part of Yancoal.

Thanks, Kevin. A question on the coal markets from Bennett, IPFM. Have you seen sustained demand coming from Japan, Korea, as you noted in your quarterly results? Could you provide any insight on supply coming from Indonesia? Mark, could we turn back to you for what we've seen in terms of demand out of Northern Asia and how that relates to the buyout of Indonesia?

Sure. Yes. Yes. Thanks, Brendan. Look, demand from Japan and South Korea, in particular, as well as Taiwan, it's been very solid. And I think we'll see overall -- the numbers are slightly above year-to-date, slightly above last year. So I think overall, for the whole year, we will see an increase in demand in those markets compared to last year's results. As I said, that's -- a lot of that's got to do with the coal to gas -- sorry, gas to coal conversion and just the need for more secure energy supply and coal being the likely candidate.

What also is happening in Indonesia is very interesting at the moment. There was a lot of talk at the beginning of the year about the Indonesians applying quotas to exports. Those quotas were predominantly in their lower-grade materials, not their higher-grade materials, their higher grade materials award the higher prices. So the government was keen to maintain the royalty that's attracted and that higher-grade coal goes to Japan, Korea and Taiwan. So the Indonesian impact really hasn't had a big result in those markets. We are seeing a little bit in some of the Koreans that take the mid- to high ash, and we're definitely seeing it in China with China imports of Indonesian coal significantly down year-on-year.

The impact there is the quotas were cut to 600 million tonnes. There's a recent report that's saying they could be up to 700 million tonnes. And there was also an increase in how much producers have to allocate to the domestic market as well. So the Indonesian policy structure is one market that we're watching very closely. And it's always at the 11th hour before they'll make any firm policy decisions in that regard. I hope that answers the question.

Thanks, Mark. I think it should do. For all the participants, I have just about exhausted the webcast questions, and I do not see any phone line questions coming through. So a final reminder to add a question to the phone or the webcast if you have one. I'll read the final question I have. And if I haven't heard further, we'll move to the closing remarks.

The last question that I have at this time from Mark Patterson at Bell Potter. Looking at the first half, and API5 starting the year at $108 per tonne and finishing at $135, how do we see the split between first quarter and second quarter EBITDA of $767 million? And they're asking if they can try and understand the run rate between first quarter, second quarter and undoubtedly heading into the second half?

I will just give a quick response here. In our quarterly production report, we didn't disclose every quarter financial performance. That's why this EBITDA number is the first 6 months instead of 2 quarters. That's the reason why you couldn't see the run rate. We fully appreciate that. Because we haven't disclosed it. I will be very cautious to give any number. But I think from -- if you look at our price, we have several slides with the coal price movement. You can see clearly the coal price is moving reflecting the recent trend due to the latest energy crisis from Iran-U.S. conflicts. And for that reason, we naturally can say the financial performance of EBITDA going to be consistent with the realized coal price. And you will see the EBITDA for Q2 will definitely be a lot stronger than Q1 as a trend.

Thanks, Kevin. I think you're referring there to Slide 17 from earlier in the pack, where you can see those indices have been plotted and rising and our realized prices, while moving upwards have yet to perhaps capture that full benefit, which is typically the case, the general reference we make is about a 3-month lag between indices realized price.

This is all the questions that I can see on the webcast. I do not see any questions on the phone lines. Maggie, could you please confirm no phone line questions.

Yes, I confirm there's no phone line questions.

In that case, I will now say that we have concluded the question-and-answer session. And I'll ask Sharif, if you could please provide the closing remarks.

Thanks, Brendan. 2026 is shaping up as another great year for Yancoal. We delivered a first half production record, with strong EBITDA margin and cash flows and are on track to beat the annual production record we set last year. Our people are leading the way in the industry, setting world records with our excavators and breaking records with our coal railings. We're excited about completing the Kestrel acquisition in the next month or 2. It is a high-quality, long-life metallurgical coal mine operated by a great team of people. We anticipate it will complement our existing portfolio and further enhance our financial strength. Asset quality and financial discipline put us in a position to acquire Kestrel but not at the expense of maintaining dividends to shareholders.

After the transaction, our remaining cash balance and net debt position will still afford us the capacity for a balanced allocation of capital. We're optimistic we'll deliver a strong operational performance in the second half and deliver the best possible outcome with our executives and people. We look forward to giving you our next update on the 20th of October, after we release our third quarter production report. Thank you to everyone who joined us on the call, and have a great day.

Thank you, Sharif. Thank you, Maggie. Could you please conclude the call?

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Yancoal's Second Quarter 2026 Production Report. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the call over to your first speaker today, Mr. Brendan Fitzpatrick. Thank you. Please go ahead.

Thank you, Desmond, and thank you to everyone on the call for joining this briefing on Yancoal's second quarterly production report for 2026. We have several members of Yancoal's executive leadership team to recap the quarter and participate in the question and answer session. The commentary provided today is based on the quarterly production report published on the Australian Securities Exchange and the Stock Exchange of Hong Kong announcement platforms on the 20th of July. There is no presentation pack for this conference call. The Yancoal website holds past presentations for any participants who require additional information on the company. I'll hand over to our Chief Executive Officer, Sharif Burra, to provide second quarter highlights.

Thank you, Brendan. I also welcome everyone joining us on today's conference call. Before I touch on those, it's important to acknowledge our total recordable injury frequency rate increased over the past quarter. I'm a firm believer that safety, productivity, and cost efficiency are closely linked. We've already taken steps to counter the recent trend through targeted safety intervention activities. Fortunately, the safety performance did not impact production in the second quarter. We delivered a quarterly production record of 10.8 million tonnes of attributable saleable coal. As anticipated, the operational focus shifted from overburden removal to coal recovery during the quarter. Production was up 20%. The quarterly performance carried us to a first half production record.

19.8 million tonnes of attributable saleable coal production, which was 5% ahead of the first half last year, putting us on target to exceed last year's production record and deliver in the upper half of the 2026 guidance range. In April, we announced the Kestrel transaction and have since made good progress on the required approvals. Several conditions precedent have already been satisfied, including the Foreign Investment Review Board approval. The target date for completion is towards the end of September quarter 2026, but could occur earlier if everything falls into place. While it is pleasing to report production records and delivering growth initiatives, at times, we need to make difficult but necessary decisions about our assets. In late June, Yancoal made the decision to cease operations at Ashton from early 2028. The decision was made necessary due to a combination of technical, geotechnical, and economic challenges.

Our immediate focus is on supporting our workforce and their families through this period. This includes exploring redeployment opportunities where possible, along with providing career transition support and wellbeing assistance. I'll now hand over to other members of the executive team to share further details from the second quarter, starting with David Bennett, our Executive General Manager of Operations.

Thank you, Sharif. Three months ago, we discussed the outlook and potential implications if diesel supply was constrained. So far, this scenario has not developed, and our operations and procurement teams continue to work closely with our diesel suppliers regarding continuity of delivery. We have a rolling two-month commitment for diesel supply, and as can be seen in the second quarter performance, our mines continue to operate to plan. The outlook for our cash operating costs has improved since we released the first quarter report in April. We are still incurring higher diesel prices, but the overall outlook for impact on our 2026 operating costs has eased slightly. As Sharif mentioned, we delivered a quarterly production record and a first-half production record. These records were made possible by producing 17.5 million tonnes of ROM coal, a 17% uplift compared to the first quarter.

From the ROM coal, we produced 13.8 million tonnes of saleable coal, also 17% more than the first quarter. Our attributable share was the 10.8 million tonnes Sharif referenced. Moolarben and MTW were strong contributors to the performance. Moolarben's open cut and underground mines both operated at or above target levels for most of the quarter. This supported elevated feed rates into the coal handling and preparation plant. The 23% increase in saleable coal production was better than we had targeted. MTW had favorable operating conditions throughout most of the quarter and improved equipment reliability. The overall operational performance was just ahead of target, delivering a 34% uplift in saleable coal production from the prior quarter. Ashton, however, encountered challenging mining conditions caused by the presence of hard strata in the coal seam.

Its production dropped by 20% and needs to improve in the second half to avoid putting upward pressure on the group operating cash costs. I will now hand over to Brendan Fitzpatrick to provide commentary on the coal markets on behalf of Mark Salem, our Executive General Manager, Marketing and Logistics.

Thank you, David. Our attributable sales were 11.6 million tonnes, an increase from the prior quarter, reflecting both the highest saleable production and the timing of shipments relative to the reporting period. During the quarter, the Argus McCloskey API 5 Index averaged USD 96 per tonne, up 19% from the prior quarter, and the GC Newcastle Index averaged USD 135 per tonne, up 14%. By contrast, the metallurgical coal indices we referenced were both similar to the first quarter. The Platts Low Vol PCI Index averaged USD 161 per tonne, and the Platts Semi Soft Index averaged USD 143 per tonne. Our overall realized coal price for the quarter increased 9% to AUD 160 per tonne. While this included an 11% higher average price for our thermal coal, most of the positive impact from the second quarter uplift in the thermal coal indices should flow through to subsequent quarters.

Energy markets were volatile over the past three months. End users, traders, and speculators had to weigh geopolitical risk factors against supply and demand fundamentals, with many governments taking proactive action to secure energy supply. By the end of the quarter, speculative trading activity was abating on expectations that oil and gas supply recovery was underway, despite liquified natural gas Asian spot prices having increased more than 75% since the US-Iran conflict commenced. Thermal coal imports into most of the regions we supply have increased over the first five months of 2026 compared to 2025. There were several common thematics driving the uplift. LNG pricing, availability, or conservation was a primary factor. Also, higher power demand and lower hydropower generation associated with the El Nino weather cycle developing this year was a factor. At the same time, international seaborne supply from most major exporting countries has fallen year-over-year.

Australia is an exception, but elsewhere, various regulatory or logistics constraints have hindered supply. Turning to the metallurgical coal markets, we observed a strengthening steel market and stable demand for metallurgical coal. While China required additional metallurgical coal imports to counter reduced domestic output following the Shanxi mine accident, which led to the temporary suspension of production at 135 mines. I will now hand over to Kevin Su, our Chief Financial Officer, to address the financial position.

Thanks, Brendan. Sharif recognition there is a possibility the cash transaction might complete earlier than initially expected. We are ensuring that loan and working capital facilities required will be ready should this scenario occur. We ended the quarter with over AUD 2 billion in the bank. In the cash flow announcements, we said between USD 650 million and USD 850 million of the upfront payments will be funded with cash. The final amounts will be determined by the cash accumulation from now and completion late in the third quarter. Sharif also described the expectation for our production to raise the upper half of the guidance range, and Brendan just indicated the higher realized prices we are likely to achieve in the third quarter. We will determine the optimal cash funding components for the transaction based on these factors as the completion date approaches.

The third element of our guidance for 2026 is the capital expenditure. We now project the expenditure will likely be at the low end of the range as some expenditures slips to 2027. We look forward to providing more detailed commentary on this and other aspects of financial performance in our first half results next month on the 19th of August. I will now hand back to Brendan to coordinate the Q&A session.

Thank you, Kevin, David, Sharif, for highlighting the drivers of our second quarter performance. We will now move on to the question and answer session, starting with questions from the phone, then moving to questions submitted via the webcast. Desmond, could I please ask you to initiate the process of questions via the phone, and I'll keep an eye on webcast questions as they accumulate.

[Operator Instructions] There are no questions from the phone line. Please continue.

Thank you, Desmond. I'll come back to you to check if a question's coming through on the phone line. In the meantime, looking at the webcast questions. First question for you, Kevin, on the financial aspects of the quarterly. The cash balance was steady at just over AUD 2 billion, consistent with the March quarter. Can you please share with us the various movements such as net mining cash flow, capital expenditure, and any other major items of cash flow that led to this steady outcome?

Thanks, Brendan. That's a very good observation. Yes, we do have pretty much the same cash balance for Q2. A few things I would like to highlight and share with investors. One is we have paid our final dividends for AUD 1.61 billion in April. We also have paid a deposit for Project Kestrel, which cost us about AUD 56 million to AUD 57 million. That's about USD 40 million. In addition to these two special payments, I would like to also highlight some mismatch or temporary volatility of our cash flow. For example, on 30th of June, there is a payment batch of AUD 133 million, and then the next day, 1st of July, there's a receipt of AUD 100 million. That's roughly about USD 68 million. For that reason, you can see this temporary volatility may cause our cash balance to fluctuate quite a lot.

Long story short, I think there's still very strong operating cash flow. Thanks.

Thank you, Kevin. I do see some advice coming through that the volume might not have been picking up particularly well. We'll just get the microphone proximity a little closer for you for this next question. A few people on the webcast have asked what comments we can make about dividend and the dividend outlook as we head into the half-year results coming out in a month's time.

Thanks, Brendan. I think from Yancoal's perspective, the dividend position has been pretty consistent. We have been making the same position. We will be paying from a general guidance perspective, I would say the 50% NPAT or 50% free cash flow, whichever is higher, and subject to the Board's final decision. We are pretty much still following the same indication to the market for now. Thanks.

Thanks, Kevin. Desmond, I believe we have a question coming through on the phone line. Could I go to you for that question, please?

[Operator Instructions] We have a question from the line of Glyn Lawcock from Barrenjoey. Please ask your question.

Thanks for your time. Yes, just had a question on closing of the Kestrel acquisition, which you said hopefully will complete before the end of September quarter. I know you've got the Australian Foreign Investment Review Board approval. What are the key regulatory outstandings now then to get it to complete by the end of the September quarter? Are they fixed in time, or could they slip?

Yes. Thanks for the question. At this point in time, we're reasonably confident that the further clearances and waivers that we need are in hand. There is obviously always the chance they could come forward or slip. At this point in time, we're reasonably confident that they will complete as we plan.

Sorry, is there a particular one? Is it one of the Chinese authorities that needs to sign off? I mean, obviously Foreign Investment Review Board was a big one to get from the Australian side. Is there one particular one that is most important to get signed off?

Hi, Glyn. Brendan here. Appreciate the question. You are quite right. The Foreign Investment Review Board was one of the most critical steps for us. The majority of the ones remaining relate to international regulatory competition from various nations. We are working through those processes, supplying the information that is required that allows the various bodies to reach a level of understanding and comfort with the proposed transaction. As Sharif suggested, they are proceeding. We think they will complete on time or ahead of time, until they complete, we cannot be definitive on the schedule, but we are optimistic.

There is no red flags, though, Brendan, I guess is the key message.

Quite the point. We are quite confident that we are progressing towards completion, it is just a matter of timing and sequencing, we still need to go through the processes, far be it from us to be explicit until such a time that all things are put in place.

Desmond, any further questions from you before I go back to the webcast?

[Operator Instructions] There are currently no questions from the phone. Please continue.

Okay. Looking at some of the webcast questions. A question coming through on coking coal price indices. I suspect this is related to some of the recent media commentary coming through. Do we think coking coal indices, the pricing structures are working well? Do we think any reform is needed?

Yes, thanks, Brendan. Look, we're certainly aware of the recent editorial from a POSCO executive on coking coal price mechanisms. Yancoal's got a very respectful and productive relationship with POSCO, which is a valued customer and partner of ours. At this point in time, we won't be speaking publicly on this issue.

Thanks, Sharif. Earlier, David mentioned the diesel cost impact on the company. One of the questions coming through is what is the current proportion of diesel cost impact on the company, and how does the company manage the diesel costs? What I can say on that one is we've previously disclosed that last year, direct diesel costs comprised AUD 7 a ton of the AUD 92 per ton cash operating costs we reported for 2025. We started the year with a forecast for a similar level of diesel price within the AUD 90 to AUD 98 cash operating cost per ton we'd guided for this calendar year. At the first quarter production report, we talked about the higher diesel prices and the forward curves we were contemplating. We allowed for primarily the higher diesel price lifting the cash operating costs towards the upper end of the guidance range.

There is some easing of that diesel cost pressure and outlook. We've said we'll still be in the top half of the cash operating cost guidance range, perhaps no longer at the top end of the guidance range. There are other elements we need to be mindful of as we work through this second half for 2026. Hopefully, that's provided some context for the diesel price impact.

A question from Hanyin Yang at Morgan Stanley. Hanyin asks about the Ashton mine, which is, in her words, been suspended this year. I note that the closure actually takes place in 2028, Hanyin. We are operating through until that period of time. Hanyin is asking the question, do we expect any impairments this year in relation to the actions taken at Ashton?

Thanks, Brendan. I might provide some clarity here. There will be several phases to ending Ashton's mining operations. The initial reduction of planning and development activities, which we've undertaken. The completion of development mining in the Pikes Gully seam in early 2027, and completion of longwall mining in the Pikes Gully seam in early 2028. It is a staged approach. The longwall will keep operating through until 2028. It's more the immediate impact of development activity. I'll hand the impairment question over to you, Kevin.

Thanks, Sharif. Yes, just what Sharif just mentioned, unfortunately, we will have to shorten the mine life of Ashton as a result from accounting for space. There will be corresponding accounting treatments. It's not necessary to be an impairment, but it is somehow going to be reflected in our financial accounts through different recognition. One thing I think worth to be mentioned, as I just mentioned about our dividend position, Yancoal's dividend is between 50% free cash flow or 50% NPAT. For such accounting treatment, it's going to be non-cash. It will not impact our free cash flow as such. We are not expecting this will have any impact on our position about dividend. Thanks.

Thanks, Kevin. I'll stay with you for another financial question. It relates to the Kestrel acquisition. The question is: Is there any project-level debt to be taken on with the Kestrel acquisition?

Thanks, Brendan. Just a very good question. Probably I will split this question into two. One is we will be getting debt, not at a project level. The current Kestrel level debt will be repaid, and then we will replace it with a Yancoal corporate-level debt. We have announced it in the previous Kestrel announcement, which is USD 1.2 billion that we are intending to take out. We also prepared another USD 250 million working capital facility. It's not necessary for us to take. Thanks.

Thanks, Kevin. Desmond, I'll just check. It doesn't appear to be the case. Are there any further questions coming through on the phone lines? I'm getting towards the end of the webcast questions.

[Operator Instructions] At this time, there are no further questions -- I beg your pardon. One moment for our next question. You have a question from the line of Mark Charles Paterson from Bell Potter Securities. Please go ahead.

Congratulations on a good quarter. Just a quick question on drivers of profitability. Obviously, in Australia, I think Yancoal are unique because they've got exposures to API 5, which obviously the other New Hope in the Whitehaven are exposed to the NEWC. Obviously, there's a big jump in API 5. Can you just give a brief on profitability of the company and what is actually the major driver? Obviously at AUD 96 for the quarter, I look back to FY '24 was really you did AUD 6.8 billion revenue, AUD 2.6 EBITDA and your API 5s are 93, 89, 87, 88. Now you're at 96. How does that increase API overlay on profitability, operating margin and sort of direction of the profit of the company?

Thanks, Mark. Appreciate the interest in the components contributing towards Yancoal's revenue, cash flow and profitability. Skews slightly towards better than 50% API 5 product, but we do have a good component of the GC Newcastle style product as well, and some products that sit in between the two indices. We typically suggest that most of the coal coming out of the Hunter Valley proper, which is MTW and HVO, is predominantly the GCNewc style coal, with some lesser components being a semi-soft product. It depends which seams we're operating in and the coal qualities that we're getting in any period of time.

By contrast, the Moolarben mine sits further west in a different coal basin. We predominantly get the API 5 style product out of Moolarben. If we look at the quarterly production report on the second page, we can see the volumes coming out from each mine on 100% basis, and we can see that the equity stake or the interest we have in each of the mines. That allows people to gain an insight into the production components coming through from each of the operations and the equity stake we take from those mines. We've got a good spread of coal products. Yes, we do have a greater exposure to the 5,500 kilo calorie or the API 5 product than most of the Australian exporting peers. The rising API 5 price in U.S. dollar terms is certainly constructive.

Whilst we don't talk about mines individually when it comes to cash costs, we've generally acknowledged that the Moolarben mine, particularly with the underground component, is one of the lowest cost operations within our portfolio. That combination of a strengthening API 5 price with low cost production out of Moolarben certainly contributes to the company's overall profitability, and we look forward to being able to provide some more detailed comments around the financial performance achieved through the first half when we report the results on the 19th of August.

Brendan, just one final one. Just on Indonesia, obviously that is a big exporter in that API 5 market into China. Is there any updates? Obviously, start of the year, we're talking about sort of cutbacks and lower seaborne trade there. Obviously, I think it's got a bit confused in the last couple of months or so. Have you seen any updates on their export levels or their centralized of shipments out of that country?

There's certainly indications. The market's behaving as if there'll be some impact on exports out of Indonesia. We're looking for more definitive information on that topic. I might just check. I believe one of our colleagues, Mark Salem, EGM for Marketing and Logistics, might have been able to join us late on the call. His comments on his behalf earlier. Mark, are you online, and are you able to comment on what we see and are hearing with regards to thermal coal exports out of Indonesia?

Yes, sure, Brendan. Sorry, I've joined late. I've just had a prior other meeting. Very simply, the Indonesian approach in terms of having a central selling unit won't really come into place until September. Up until that time, we really haven't seen any significant changes in China's imports of Indonesian coal. There has been a little bit of a decline, nothing substantial, and we're watching that quite closely. We do feel that that's having a little bit of an impact on the API 5 market as the buyers are trying to secure probably a little bit more Australian coal. We haven't seen any dramatic moves in that area yet. It's something we're watching post-September. We'll be watching it very closely as part of our Q3, Q4 sales profile as well.

Thank you, Mark. Back to Mark from Bell Potter, was that sufficient for your needs?

That's lovely.

Thanks for joining us. I don't see any other phone questions coming through. I've got one last webcast question that I'll ask. If anyone wants to participate, this is almost your last opportunity. Turning to Mark Jacobs, I'll ask for an observation on the extension for the mining license at Hunter Valley Operations. There's been some activity in regards to that process in recent times.

Thanks, Brendan. As you would have seen from the quarterly production report, HVO is currently going through a public hearing process in front of the Independent Planning Commission. The project was referred to the Independent Planning Commission to conduct a public hearing and to make a determination. The first two days of the public hearing occurred last Thursday and Friday in Branxton. There is a further session scheduled for tomorrow, which is an online session. There have been speakers both in favor of and opposing the mine, as we would have expected. We're confident that the impact assessment has been robustly conducted.

There is a very comprehensive assessment report by the Department of Planning, and in particular, the Environmental Protection Agency has confirmed that the emissions profile of the mine is consistent with New South Wales' necessary emissions trajectory. Without wanting to preempt the process, the IPC will complete its process, and it's been directed to hand down its decision in early September.

Thank you, Mark. We've had one extra question come through in the last minute. I'll stick with you on this topic. It relates to the Moolarben Open Cut 3 or OC3 extension approval process. What can we say on that matter?

Thank you again. That project had been referred to the Independent Planning Commission, we have updated and amended the project application to include some additional biodiversity areas or biodiversity enhancement areas, which was a recommendation of one of the independent expert advisory panels who were advising the government. That process is not yet completed. There are a couple of additional questions that have been put to us by one of the regulators, we expect that we will complete our process and hand it back to the government within the next month. After that, they will complete their revised assessment, we expect the project to be referred back to the Independent Planning Commission later this year for determination.

Thanks, Mark. Another question has since come through from Eunice at Millennium. She recognizes the strong performance in the second quarter and asks how we should think about the lowering of the cost guidance. Is it primarily due to the increased production to offset the fixed costs? How is diesel price factored into the percentage of costs in the second quarter? I'll go to Sharif for the first comment.

Thanks, Eunice. Obviously, a mixture of a few things. Higher production obviously has a positive impact on our costs. Having said that, we are taking a very disciplined approach to our productivity and costs across the group. That's also contributing in terms of productivity and cost discipline. With regards to diesel, we don't provide detail to those specifics in nature. If you reflect on the comments Brendan made previously and that we've made in the second quarter, given that diesel prices haven't materially increased to the extent that we had thought it would, we have backed down those forecasts slightly, which is also contributing to a better outlook in the second half.

Thanks, Sharif. One more question has come through on the webcast. Kevin, looks like this one will be for you. It relates to the financial outlook and asks the question, what is the probability of Yancoal coming to the market for capital?

Thanks. I would assume this question relates to coming to the market for equity capital, the capital equity raising. I think so far there's no immediate plan to go to the market for equity raising. That's a short answer.

Thank you, Kevin. All right. We've addressed all the questions on the webcast. I do not see any further questions coming through on the phone line. I'll hand over to Sharif, if you could provide some closing remarks before we end the call.

Thanks, Brendan. At the halfway point in the year, we're looking forward to a great second half. We're on track to exceed the production record we set last year. The operating cost outlook has improved modestly from what we anticipated three months ago. Our realized price has yet to fully capture the benefit of second-quarter thermal coal prices. The Kestrel transition work is progressing well, and securing the FIRB approval was a notable step towards the potential early completion. Production, realized price, and operating costs are the primary drivers of our financial performance. We look forward to speaking with you again in just over a month's time when we release our first half results for 2026. Thank you for joining us. Have a great day.

Thank you. Desmond, could you please conclude the call?

That does conclude today's conference call. Thank you for your participation. You may now disconnect your line.

Good morning, and welcome to the 2026 General Meeting of Yancoal Australia Limited. I've already been introduced. I am pleased to chair today's meeting, and welcome those shareholders, interested parties, directors and staff in attendance and those participating online.

I'll begin today's meeting by acknowledging the Gadigal people of the nation, traditional custodians of the land on which we meet today and pay our respects to their elders past and present. I extend that respect to any aboriginal Torres Strait Islander people here today.

In 2025, Yancoal delivered a new production record for the company and set 2 world records with our Lever 9,800 excavators. The company holds interest in 6 producing mines and is the second largest coal producer in Australia. A position will advance with the completion of the Kestrel Coal Group acquisition later this year. I've been informed by the share registry that a quorum is present, and I declare the Annual General Meeting open.

Let me introduce share to my fellow directors attending in person or by telephone. Let's see, in the room, we have Ning Yu [indiscernible] and Peter Smith. Online, we have Chairman Rouge. Mr. Wang, Mr. Hwang, Mr. Lee and Debra Bakker. Unfortunately, Mr. Jay is traveling and sends an apology. I'd also like just to introduce my executive here to my right, Sharif Burra, the CEO of Yancoal since September 2025. Kevin Su, Chief Financial Officer; Mark Salem, Head of Marketing and Logistics; and Mark Jacobs. Environmental matters and other things are shared with community.

As many of you are aware, we appointed Sharif's Chief Executive in September. Shall will present the 2025 company review during this meeting. as well. I will now formally commence today's proceedings. Commentary provided today includes forward-looking statements, the notices and disclaimers on Slides 3 and 4 pertain to those topics. This year, we have again encouraged shareholders to participate in the AGM via webcast. In addition, we have done our best to ensure that all shareholders and proxy holders will have the opportunity to participate in the meeting, including for those entitled, the ability to ask questions. We have undertaken efforts to ensure that the meeting proceeds smoothly today. Being a dual-listed company, the relevant documents have been disseminated on both the ASX and Hong Kong Stock Exchanges, in accordance with the applicable requirements of both exchanges.

Today's meeting can be observed online via Computershare virtual meeting services platform, which allows shareholders, proxy holders and guests to observe the meeting virtually. In addition, shareholders and proxy holders can submit written questions in real time using this platform. If you have joined us through a Computershare virtual meeting services platform, you can start submitting your written questions now, and we will address them later in the meeting. Please also note that your questions may be moderated or amalgamated if we receive multiple questions which deal with the same topic.

I would now like to invite our Chief Executive Officer, Sharif Burra, to provide the 2025 company review.

Thank you, Mr. Fletcher. [indiscernible] and welcoming our shareholders, interested parties, directors and staff to this year's Annual General Meeting. This is my first opportunity to speak with some of you and although not new to the role of CEO, my history with Yancoal [indiscernible] 2005 at the company's first asset [indiscernible] in a line or other times.

Throughout my career, I follow in our workforce safe should be ours priority. The fees growth and on both industry average, but we continue to aim to [indiscernible]. Safe mines are productive lines and push pose a strong operational outcome this year is underpinned by our commitment to continually improve our safety performance. As part of our 2025 financial results, we published our overall client-related disclosures under the Australian AASB II many reporting requirements. This will conclude our detection and assessment of climate-related risks and opportunities.

To strengthen climate resilience and support the pay for sustained early strategy.

We'll put through a time the amount of emissions of the entire state of New South Wales. How dare you go ahead with this project, you are taking my future and the future of millions of others on the show vesting out are responsible for the inquest climate disasters, bush fires, memos and to. So blood is on your head, how can you sit here and say you how about climate. -- actions Rite families live a mental climate is ounces and natural resources that you are responsible for. This is the largest coal project in New South Wales history and you have a gap proving that order. How do you it. is in the audience.

I apologize to everybody for that. We thank you for your patience. Sorry, Sharif.

Apologies. As part of our 2025 financial results, we published an overall unrelated sales under the Australian AST mandatory reporting requirements. This we have concluded identification and assessment of the climate-related risks and opportunities. To strengthen climate resumes and support the nope sustainability strategy, we intend to develop firmer transient tier.

Things like your HBO projects because the climate crisis and the climate and health prices I see you -- and I see how he kills people silently. -- alone. I looked after a patient in ICU this past January, who had, had a cardiac arrest on the 42-degree day in Sydney this January. -- heat and dehydration multifunction cardiac failure, kidney failure and the leaking of inflammatory toxins from the gut into the blood. Heat worsens neurological injury heat causes fatigue. And this is how heat almost killed my patient. Coal mines like HVO cause unsafe air and cause respiratory illness. Coal mines like the HBO project, steel water from our drinking alone, causing water and security, Coal destabilizes global weather patterns needed for agriculture, causing food and security and mall nutrition.

Burning coal causes global heating, which turns our planet into a petri dish for bacteria and viruses and new pandemics. Deadly illnesses that we are not in for and that we do not have the resilience for. The climate crisis is a health crisis. Coal mines and burning coal are a climate crisis for milk crisis. The climate crisis is a health crisis I looked after a patient in January who had a cardiac arrest on a 42-degree day in Sydney, is 42 days become more common, more severe, more frequent how many more people are going to die. How many people are going to die and become disabled and become ill directly from the operations and coal production from your HVO continuations project.

I think we've given you good coverage.

Climate prices is a health care crisis, and I am the cost you now to be silent -- this is my duty as a health care professional international code for nursing ethics stipulates that nurses under the international code must advocate for the climate and for planet health. Because planetary health is human health. Human health is animal health.

Thank you very much.

I'm an ICU nurse, and I will not be silent to destroy a home or halo Coal is destroying our future.

You go -- you really are. I have medical training. No training.

Thank you, everyone. -- come to you. Our established P4 report provides an annual update on sustainability activities beyond the AASC require, including the company's Sustainability strategy.

[Technical Difficulty]

We'll move on to our highlights. During 2025, we delivered a great operational performance. Our attributable saleable coal production was 38.6 million tonnes. This was a production record for Yancoal and close to the top of our guidance range. Our cash costs were $92 per tonne, $1 per ton lower than our 2024 costs. Lowering our cost was a great outcome given inflationary pressures in the current industry setting. We achieved revenue of almost $6 billion and an operating EBITDA of over $1.4 billion, delivering 24% EBITDA margin during a period of weak till prices is a testament to the quality of our assets and our ability to operate them effectively and efficiently. Our tax -- our profit after tax was $440 million or $0.33 per share.

In accordance with our dividend policy, the Board elected to pay $0.12 per share as a fully franked final dividend. Together with the $0.062 per share interim dividend, the total 2025 dividend represented a 55% of net profit after tax payout ratio. Strong supply benign demand conditions persisted in the international female coal markets throughout 2025. Security energy supply became a more prime concern and prices have improved towards the end of 2025. Commencement of the Iran conflict 2 months ago has exacerbated this concern, leading to market expectations for further upside in international several coal prices as governments and power generators focus even further on security sober.

In the metallurgical coal markets, prices were capped in 2025 by the oversupply of steel in the global market resulting in subdued demand for the metallurgical coal used to produce steel. However, temporary supply disruptions in Queensland earlier this year and linkages to the thermal coal markets have resulted in prices improving more recently. We included a slide on the dividend history as we believe it is important to recognize the consistent payout ratio to shareholders. Dividends to shareholders over the base years totaled more than $4 per share. Yancoal has been disciplined with its capital allocation, consistently following its dividend policy while also accumulating a significant net cash position.

Our disciplined approach to capital management put us in a good position to acquire 80% of the cash flow coal line in April. Kestrel is a high-quality long-life metallurgical coal mine, and we view as strategically aligned with our operating strengths. Being an established producing mine for the date of completion, cash flow will immediately contribute to our production volumes and operating cash flows. The upfront consideration is USD 1.85 billion. We will fund this payment with cash on our balance sheet and a USD 1.2 billion acquisition facility. We also have in place a USD 200 million working capital facility for additional support. The acquisition is subject to satisfaction of regulatory conditions and approvals, providing all the conditions unmet and approvals of time, we aim to complete the transaction towards the end of the September quarter this year. We strongly believe cash flow is a high-quality and attractive acquisition that will deliver on Yancoal's value-adding growth aspirations and positions the business to deliver strong performance and shareholder returns in the future. This year, we aim to produce between 36.5 million and 4.5 million tonnes of attributable saleable production. If we reach the top half of the guidance range, we will match the record output we intrigued last year.

At the start of the year, the midpoint of our 2026 cash operating cost guidance was $94 per tonne just above the cost of $92 per tonne we reported last year. We now anticipate higher diesel prices experienced throughout the industry could push 2026 cost towards the top end of the range. Global energy markets currently face a good deal of uncertainty. While we would likely incur higher diesel costs, we potentially put a benefit from rising coal prices.

In the current market conditions, our scale, margins, financial strength and access to debt serve us well to be competitive in the seaborne global market. We recently utilized these advantages to grow the business by buying Kestrel, a high-margin long-life asset. That completes the 2025 company review.

I'd like to hand back now to Greg Fletcher for the remainder of the meeting. Thank you.

Thanks very much, Sharif. We will now move to the formal consideration of the business before the Annual General Meeting. Anyone attending in person today will have been issued an attendance card. Blue indicates a voting shareholder or proxy holder for the Yancoal Australia Annual General Meeting, Yellow indicates a nonvoting shareholder and white indicates a nonvoting visit. Persons holding either a blue or yellow card are entitled to speak at this meeting. However, only those persons holding a blue card are entitled to vote at this meeting. If any shareholder here is eligible to load and does not have a blue color card, we can please raise your hand now.

People holding a white card are only entitled to serve the meeting and are not entitled to vote will speak at this meeting. Resolutions will be decided by poll conducted at the end of the meeting. The poll results will be available on the ASX and Hong Kong exchanges later for the day.

The following summary outlines the items of business for today's meeting in accordance with the Notice of Annual General Meeting for Yancoal Australia, which was published on our website and dispatched to shareholders. The Notice of Meeting contains the text of each resolution to be put at this meeting. With your approval, I now move that the notice of Annual General Meeting be taken as read and the text of each resolution be taken as read. All those in favor, please raise your blue attendance card. All those against, please raise your blue attendance card. The proposal is passed, a notice is taken to be read. Thank you.

Item 1 is the receipt in consideration of the company's financial report for the year ended December 2025. I'll take that report as read. Representatives of Shin Wing, Yancoal's auditors, are present and available to answer any specific questions about the preparation and content of the auditor's report.

Item 2 is the reelection of directors Chairman Ru, Mr. Wang, our existing directors and are nominated to be related to nonexecutive directors. Their biographical details are contained in the explanatory notes to the notice of meeting. Item 3 is the adoption of the remuneration report. The remuneration report is contained within the 2025 annual report. I will take the report as read. This vote is advisory only and not binding on the company group of directors. Voting exclusions applied to this resolution as outlined in the Notice of Meeting.

Item 4 is the issue of Stifel to the Co-Vice Chair under the equity incentive plan. approved we saw it for the issue of up to [indiscernible] step rights to Nine, the Co-Vice Chairman and Executive Director of the company under the company's equity incentive plan on the terms set out in the explanatory notes to the Notice of Meeting. Though the exclusions applied to this resolution as outlined in the Notice of Meeting.

Item 5 is the reappointment of the auditor and authorization to fix the audit at each Annual General Meeting, the company must appoint an auditor to hold office from the conclusion of that meeting until the next Annual General Meeting and provides the Board the authorization to fix the auditor's remuneration for the year ended 31st of December 2026.

Items 6 to 8 are general mandates related to issuing and repurchasing shares. Unless the company obtains these general mandates its ability to exercise its right to issue shares without obtaining shareholder approval is limited and the proposed repurchase mandate gives the company the flexibility to repurchase the shares if and when appropriate. The passing of Resolution 8 is subject to the passing of resolutions number 6 and 7. The reason for this resolution is to ensure flexibility to allot and issue more shares if the proposed repurchase mandate is exercised.

It is worth noting Yancoal's on their assets and stock exchange of on comp Unlike the ASX listing rules, the Hong Kong listing rule wire companies to seek approval the general mandate to issue and repurchase shares at an AGM. The company's existing mandates were last approved by shareholders at the company's 2025 AGM. I might note that has since 2019 as well. Unless otherwise renewed, the existing mediates will lapse at the conclusion of this year's AGM.

Although Yancoal [indiscernible] maximum mandate committable under the Hong Kong listing rules, it still may not exceed the limit set by the ASX listing rules in relation to shares issuance unless additional shareholder approval is obtained in compliance with the ASX listing rules. Both the ASX and stock exchange of Hong Kong set out clearly with some parameters on share issuance. The company seeks the full flexibility afforded under these limits and parameters in order to maximize its capacity to benefit shareholders should suitable opportunities arise. The board recommends for all resolutions as set out in the explanatory notes to the Notice of the Meeting, the Board has recommended that shareholders vote in favor of all resolutions.

The proxy votes received before the meeting have been counted, the totals are shown on this slide. I'm now going to cast the votes for the proxies I hold on all resolutions in accordance with the directions provided by shareholders or otherwise as set out in the Notice of Meeting. As mentioned earlier, a poll will be conducted to these resolutions at the end of the meeting.

We will now take questions from shareholders on any matters relevant to the business of the meeting. We will begin with questions submitted in writing before moving on to questions from shareholders in the room and then questions submitted via the webcast.

As a reminder, anyone holding a blue or elect are entitled to ask questions at the meeting. Therefore, on request any speakers from the floor, please raise their blue or you look at someone will bring a microphone to you, so you may state your name before speaking. If you are a proxy holder or representative of a corporate proxy, please also state the name of the shareholder you are representing. Questions received by the webcast platform may consult or summarize to facilitate the session. So without further ado.

Mr. Chairman, we had 2 questions submitted in writing ahead of the meeting -- the first 1 from the La Corno family Superfund, the question asked, why is Yancoal paying out the large cash surplus, assuming it is not held issue takeovers and acquisitions.

I'll take that one. We had at the 31st of March, I think, $2 billion in the bank. We have announced the Kestrel acquisition where we'll be using between USD 650 to USD 850 million in cash. So that's going to play out $2 billion. But I must say, I think we'll also continue to be consistent in our dividend payments in the future.

Chairman, the second question submitted ahead of the meeting from Mr. Evan Karru. The question asked, how has the performance of rail being in delivery coal to New South Wales and Queensland ports?

Thanks, Brent. Well, thank Mr. Crow's question and asking about the infrastructure. that connect our coal lines with our customers and the international markets. In Comcast, the first half of last year, the minimal weather-related disruptions to the round activities. You might have noted in our first quarter or our attributable sales production of 9 million tonnes was higher than our attributable sales of 8.2 million tonnes. Rest assured, this volume due to any mail constrained that was set the culmination of rebuilding stocks and the fine shipments relative to the quarterly reported period, and $38.6 million in tons we delivered last year was a production report for the company. And again, we can deliver in the upper half of the production volumes this year in saves performance.

That concludes all the questions submitted ahead of the meeting in writing.

And online.

Online, we have several questions coming through. I see Paul from Stephen Mayne when you like to start to amines. The first question from Stephen Mayne what proportion of the hole we produced is exported to China? What proportion is used in Australia and where else do we export our coal.

Well, Australia is about 0. In terms of China, it varies between years. So some years, it's been up to 41% over the last and -- but down to 24%. Without the -- I'll ask Mark to probably add some more color.

Yes. Thanks, Mr. Chair. Thanks for that question, Simon. Look, very simply, it's our marketing strategy to always optimize our sales and our revenue based on our product mix. And so we're quite fortunate in that sense that we've got a quite a diverse portfolio of markets that we sell our coal to. As the Chairman relayed last year in 2025, 31% [indiscernible]. Following that, in decrease the increments is Karen Taiwan, Vietnam, Thailand, Malaysia, quite a diverse set of Asian countries that we sell our culture, and that's based on our product mix and optimizing the value. In contrast, Japan is our highest revenue market. So because we do sell some of our more premium products into that Japanese market. So that's always our objective. Thank you.

A second question from Mr. Stephen Mayne. question starts. The largest against vote at the 2025 AGM was 8.6% on the general mandate to issue shares based on the proxy moves -- this year, that will position has risen to 18.1%. I don't understand this issue. Could the Chair please explain why some proxy advisers and their institutional clients vote against this proposal and what is our response to those concerns?

It probably reflects the differences being an ASX listed company, but we've also got Hong Kong requirements. So under Hong Kong requirements, we need to do it to give us flexibility. These have been standing items at the AGMs for the last -- since 2019. We always apply the highest standard between the ASX and the Hong Kong. And in that regards, the ASX, you've got a 15% limit, which would become what we'd had to apply a versus Hong Kong where there's a 20%. So it's probably a lesson for us in terms of how we can improve this next year and make it clearer. But what we're doing is providing flexibility, there is room for improvement in whatever resolution is there.

The third question -- on Steve and me, thank you for noting the proxies early to the ASX along with the formal addressing the proxies early to the ASX along with the formal addresses. There was a 9.8% vote against the reelection of Director Gang Ru, which of the proxy advisers produced a report ahead of today's AGM and did any of them recommend Evo against Mr. Ru? If so, what was the nature of their concern and what is the company's response?

So the proxy advisers, ISS and ACSI voted against Chairman Ru's reelection. Yancoal Energy own 62% thereabout. So just by the nature of our shareholder, we have a majority of Chinese directors from our major shareholder, including Chairman Ru. So I think the voting against reflected probably 2 things: the level of independent directors on the Yancoal board when we have 3 out of a total -- and the other 1 is diversity, female versus male as well. So I think that's the reason we had the de novo against Chairman Ru.

The final question from Stephen Ma. The new to 10.8% on July 1, 10.8% on July 1, 2024. And lately, we pay the New South Wales government in calendar 2025 and how much lower than Queensland are the New South Wales or Coal rulings. Does the chair agree, it would be nice if we had the same royalty regime as WA Gold miners to only pay a flat 2.5% royalty that pay no royalty to you on the first $16 million worth of production at each WA Gold Mine.

Be nice to have standardization right across the nation many things. So unfortunately, that's not the case. So I might ask Sharif to make some comments.

Yes. Thanks. That is correct. The said raise their royalties from 9.2% to 10.1%. That's for 1 car by and below that. You've got the car categories, which should also increase by similar ounce intense royalties advice in the coal price and as the scaling growth has been changed. So about 7% with the price and it scales up, so over $300 per tonne [indiscernible]. We do disclose our royalties and our own accounts. We haven't split that out by surviving the world East New South Wales into the estate royalty stands unable to comment on that. Thank you.

We have Three questions from Mr. Edmond Peru, who submitted the -- 1 of the 2 recent questions earlier, but the first related to rail for. So we have addressed that. I'll move on to the second does last Friday is tragic, we you show you China coal line explosion have any implications for demand for Yancoal Australia's coal product.

Maybe I'll start this with a very heavy part that we hear here these assets of the mining -- so intolerance has certainly extended to those individuals, the families and the colleges that those involved in their accident with regards to [indiscernible], I might pass over to Mark for any income.

Yes. Yes. Thanks, Sharif. Yes, I agree with those sentiments at those people who lost their lives. That mine in particular, we understand was producing about 1.2 tonnes of metallurgical coal. -- and relatively small impact in that regard to your rhinological car market. We saw some movement short term, short lived in bases as a result of that. But there's nothing -- there has been nothing substantial in regard to the land.

The final question is submitted by the webcast also from Mr. Van Karru, nations, such as Vietnam and Philippines with their increasing populations are seeing more thermal coal are the implications for Yancoal.

Yes. Thank you. Yes. Definitely, Vietnam is a growing market as is the Philippines. In particular, we will have a growing portion of our business going to Vietnam. Again, this reflects back on our diversification strategy. and our revenue and product optimization strategy. And he is definitely displaying a strong interest and a willingness to ensure security of supply. So definitely, you'll see that come through in our annual presentation on our diversification, the growing impact of Vietnam.

That concludes all the written questions via the webcast. If any are received. I'll advise you.

Is there any questions from the floor?

I have 3 questions. And the first 1 is regarding about the -- you have April first quarter update, you mentioned about diesel supply. And you mentioned your [indiscernible] by the end of May. So can you give us some details and color what the rest of the year. And also the resales whether it's been very ready, do you think could going have any negative impact for the current quarter? So my second question is regarding the cash flow. You mentioned about the -- it's a high-margin profit operation. And your current -- before you acquired essence, your current operation of the profit margin, operating margin by coming 4%. So for due diligence on, what is the road for the last 5 years, what's the operating margin? Is that comparable or going to be lower?

And also the contingent payment, can you clarify the $550 million, that's on the condition of the debt. The contract is 225. So what happened if the next 5 is the contract by low 2025. And that means that there will be no -- so my last question about dividend. By considering when Australia had the new tax laws. I just want to ask for the in the near future. For shareholders receiving the capital gain or the cash income the board aware of willing to consider instead of you share back you should consider the return more cash through the dividend because the only for shareholder wise, there will be a lot more tax effective change.

Thank you very much for those questions. I might ask Sharif.

Thank you for your questions. I'll cover the diesel part. Yes, certainly, in our quarterly report, we outlined the securities supply, as we mentioned. As of now, we aren't comfortable with securities supplied at the end of July. And we are becoming more comfortable with suppliers. So we've had no material disruptions to our mines due to diesel over the course of last -- since the Iran issues. What we do see is obviously an impressive loss and we had provided guidance in that area. Having said that, we know that diesel price has come off slightly in the last month. So diesel securities by until the end of July and as we work to [indiscernible] to stand down.

With regards to weather in New South Wales -- we had actually a reasonably dry first quarter. The rain at times as well. At this moment in time, we haven't sent disruptions to our assets in New South Wales. I might hand over to Kevin for the cash flow margin acquisition questions and clarification strategic.

Thank you very much for the questions. Actually, I have order in past years, cash flow leverage with me right now yet. But I'm not too sure how the information now. That's why I can just give some general comments. First of all, if we just benchmarking cash against some variable moments in Yancoal. I would say, [indiscernible] together as a portfolio that is largely comparable. But we recognize the fact there's some always on incident impact folks and for the deal technical issues and then also some production water issues on the intra side. But this does define the fact Castro is the post 5% from a this stay in our presentation.

So clearly, it's a very good quality life and even the 5 years life of mine left. So this is the -- your second question. The second question you started about the CGT, I think are very and see CGD. You mentioned the share buyback. I was fairly much share with all the investors over all those years [indiscernible]. Yes, we have amended today, we could buy back. But I think we'll also make a statement in the material is now something we are actually looking for. That's why back to deploying Mike. And we also agree might chance is that achieved with the fracking to all the invest sensation.

Mr. Su there's also the clarification on the contingent payment, the $50 million the price reference.

Let me clarify the $550 million accounting in payments. that price is not a benchmark contract price. It's an index price against the hard email. So any good example, if the hard coking coal index for full year over 225. Over the about 225 will be marketed by a recall realized factor. So for example, the average realized coal price is 85% of the high common coal index. The difference will be applied by 85%, we call less realization rates. That on top of that, we will less sharing is solid pro-sharing, up to $550 milli in 5 years.

My name is [indiscernible]. I've got 2 questions. One of them change related and Norbert, a good example of it here, 3 farms. I just -- I was a little bit surprised that Yancoal use their money that they have in hand to buy another coal mine rather than to a do supply considering the threats of climate change. So I'd like to give an opinion what happens in the longer term because it is a threat and people are passionate. And there's lots of arguments for and against. So I'd like to get a comment on that. The other 1 is that a company, a lot of the company's assets are in its operating people. There's a real lack of information. So I see other annual reports. Information from operating people about their operations, and they also give some key data of operating people. So I don't see it here in this AGM. I know it's probably elsewhere, but I think it's relevant. Anyway, just like a reply at those.

Thanks, John. We regularly review opportunities the intestinal opportunity does diversify into more of the metallurgical coal, probably increases our metallurgical coal by they're about to a total portfolio, also double our production in Queensland as well. And we're also very confident in probably the medium to long-term future of coal as well. and we are good at what we do in coal. But we are looking at other commodities and should the right commodity and right opportunity come along, we'll certainly be looking at those opportunities as we do.

So in virtual the operating people, well packed that on board. We do cover in a number of other terms of the annual report, there's our P4 report, which just talks about our sustainability of people, some of the key initiatives around diversification.

I'd just interrupt, I know in quite a few other annual reports, so do have a fair bit of information on reports by in. Yes. Well, to give you a sense.

No, we'll take that on board for this financial year in our reporting. So thank you. Any other questions? I might just make some comments in a little of our people at the start. But it's important to reflect in terms of Yancoal's history, the Chinese have invested over $10 billion in this organization a number of years ago. If they hadn't, we would have gone out backwards. We are very strong. We've got some of the best mines, not only in Australia but the world, okay? We employ 5,500 people. We paid over $1 billion in salary. So we're a big contributor of the economy. We paid tax of $1.3 billion last year, 2025, okay? And then there's the dividends. Over the last -- since 2018, we've paid about $5.3 billion in dividends. So we're a big contributor, I think, to the nation where it been contributed to shareholders. So I think we've got to put all this in context as well. And I think in terms of coal, it's well known that Australian coal is the best coal compared to a number of overseas jurisdictions. So just some comments.

So back to the meeting. In accordance with Rural 7.71(d) the company's constitution as Chairman of the meeting are request that each of the resolutions are decided by poll and declare voting on all resolutions is now open. The results of the polls will be calculated with the assistance of Computershare acting as the scrutineer. If you are entitled to vote, the reverse of your blue admission card is your voting paper and instructions. Please record your vote for each poll by placing a mark in the appropriate for or against box on each card you are holding. The sum of the votes cast for and against in resolution must not exceed your voting time.

If you are a proxy holder, you should have a card and a summary of votes for each shareholder that you are representing as their proxy. If a proxy holder has been directed to vote in a potential manner, then the proxy holder will be deemed to have voted per those directions by completing the voting card. In respect of any open votes, a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your open votes. If you have a query concerning any of the polls, please raise your hand and a member from Computershare will assist you. And our friend will walk round and collect.

[voting]

I now declare the poll closed. I will ask Computershare to collect the cards at the end of the meeting. The results of the poll are now not be known until after the meeting has closed. The results of the poll will be announced to the ASX and Hong Kong exchanges later today. Having completed all ovens on the agenda, I now announce the formal proceedings of today's Annual General Meeting closed I want to thank those in attendance today, calling in today's Annual General Meeting, Ben Coal Australia Limited. We also apologize for the behavior of some of our earlier people. [indiscernible] . So, thank you, and have a great day.

Good day, and thank you for standing by. Welcome to Yancoal First Quarter Production Report Conference Call and Webcast. [Operator Instructions] Please be advised that today's call is being recorded.

I would now like to hand the call over to Mr. Brendan Fitzpatrick, Head of Investor Relations. Thank you, Brendan. Please go ahead.

Thank you, Desmond, and thank you to everyone on the call for joining this briefing on Yancoal's first quarterly production report for 2026. We have several members of Yancoal's executive leadership team to recap the quarter and participate in the question-and-answer session. The commentary provided today is based on the quarterly production report published on the Australian Securities Exchange and the Stock Exchange of Hong Kong announcement platforms on the 20th of April. There is no presentation pack for this call. The Yancoal website holds past presentations for any participants who require additional information on the company.

I'll hand over to our Chief Executive Officer, Sharif Burra, to provide the first quarter highlights.

Thank you, Brendan. I also welcome everyone joining us on today's conference call. We would have spoken to some of you just a few days ago after announcing the Kestrel Coal Mine acquisition. The acquisition price for Kestrel is USD 1.85 billion plus a potential contingent cash consideration. Adding a long-life asset that produces hard coking coal at strong margins is a compelling step forward for Yancoal. We're working with the vendors to reach completion in late Q3 of 2026. As important as the acquisition will be, we're maintaining our focus on the existing portfolio, which underpins our financial performance and our capacity to pursue growth.

In this context, let's now turn to the first quarter performance. Collectively, our operations are running to plan so far this year. When setting our 2026 guidance, we indicated the first quarter would have comparatively lower production with output increasing over the remaining quarters. This profile is similar to our 2025 production profile. ROM coal volume was 1% lower than the first quarter last year and saleable coal was 5% lower. After the first 3 months, we're in a comparable position to last year. If we can exceed last year's 12 months performance, it would be another record year for Yancoal.

Understandably, we've received a number of queries about diesel supply and implications for costs. We can confirm we secured diesel supply until around the end of May and are working closely with our main suppliers. Beyond this horizon, continuity of diesel supply depends on events in the global market. As a prudent measure, we have established contingency plans should continuity of supply become less certain. Given the outlook for diesel prices, we now anticipate cash operating costs for the year could be close to the upper end of our $90 to $98 per tonne guidance range.

Uncertainty in global oil and diesel markets will require ongoing assessment of our cost profile. The positive aspect of the global energy market disruption is the potential for higher realized coal prices. The international coal price indices we sell against increased 5% to 14% during the quarter despite some buyers in the thermal market running down winter stockpiles. Due to our contract structures, the benefit of rising prices will start carrying through to our realized prices from the second quarter onwards.

I'll now hand over to other members of the executive team to share further details from the first quarter, starting with David Bennett, our Executive General Manager of Operations.

Thank you, Sharif. Our positive trend for total recordable injury frequency rate continued. It reduced to 5.77 at the end of March. Although our rate is below the industry weighted average of 9.6, we remain committed and focused to further improving our safety performance. During the quarter, we produced 15 million tonnes of ROM coal, 1% less than the first quarter last year. From our ROM coal, we produced 11.9 million tonnes of saleable coal, 5% less than the first quarter last year.

Sharif mentioned diesel supply. Yancoal's operations and procurement teams have been working closely with our diesel suppliers regarding continuity of delivery. Currently, operations are running normally, and we expect this to remain the case until at least the end of May. Longer term, there is some uncertainty as supply will ultimately be influenced by the availability of crude oil in the global market as well as the regional refining and shipping activity. Should diesel supply become less certain in the future, various adaptions to our open cut mine plans are possible. These adaptions include reducing lower priority fleets, slowing overburdened removal activity whilst delivering ROM coal and maximizing use of our electric rope shovels and draglines instead of diesel-powered hydraulic excavators. As our underground mines are less diesel intensive, revisions of those mine plans should be minimal.

Looking at the operational performance in the first quarter, the Queensland mines, Yarrabee and Middlemount were impacted by extropical Cyclone Koji early in the quarter, but subsequently recovered the lost production. By contrast, New South Wales mines had minimal weather-related disruptions during the quarter. To facilitate production throughout the remainder of the year, we have prioritized overburden removal at most open cut mines, and this should ensure we meet our forecast production.

However, as Sharif mentioned, the outlook for our cash operating costs has changed since we provided the guidance in February. In 2025, diesel comprised approximately AUD 7 a tonne of direct mining costs. This figure was consistent within our 2026 budget. However, as diesel pricing increases have started to have an effect, we now suggest cash operating costs for 2026 could push towards the top end of the range.

I'll now hand over to Mark Salem, our Executive General Manager of Marketing and Logistics, to provide commentary on the coal markets.

Thank you, David. Our attributable sales were 8.2 million tonnes, a decrease from the prior quarter that reflected lower sales production and the timing of shipments relative to the reporting period. During the quarter, the API5 index averaged USD 81 per tonne, up 5% from the prior quarter, and the GC Newcastle Index averaged USD 120 per tonne, up 12%. In the met coal market, the Platts Low Vol PCI index averaged USD 161 per tonne, up 14%, and the Platts Semi-Soft index averaged USD 146 per tonne up, 14% as well. These increases are yet to flow through to our realized prices.

After converting to Australian dollars, our first quarter average realized prices were similar to the prior quarter at AUD 134 per tonne for thermal coal and AUD 213 per tonne for metallurgical coal. Our overall average realized prices for the first quarter was AUD 146 per tonne compared to AUD 148 per tonne in the prior quarter.

The year started with conditions in international coal markets gradually improving before global energy markets were disrupted due to the Middle East conflict throughout March. There was immediate increase in speculative coal trading activity, direct impacts on the physical coal markets have been slow to emerge. The general expectation across energy market participants is that reduced Middle-Eastern liquefied natural gas LNG supply prompts gas-to-coal switching for power generation. This thesis is supported by indications that Japan, South Korea and Taiwan will lift restrictions on coal-fired power generation to improve power generation stability. However, higher levels of post-winter coal stockpiles in these countries have mitigated underlying demand as many end users take a wait and see stance.

Across the seaborne thermal coal market, there was a moderate decrease in supply during the first quarter compared to the same period last year. Supply from Australia was the same due to limited weather disruptions and minimal shipping queues. Indonesian exports were 5% lower due to uncertainty about export policy implementation and were also constrained by the expiry of temporary quota allowances.

So far this year, there has been a mixed demand activity in seaborne thermal coal market. The 2 largest importers, China and India have reduced imports due to elevated stockpiles and domestic production. Reductions were 5% and 12%, respectively. Elsewhere, demand increased 3% in Japan, where coal is a balancing fuel source for power generation and the removal of restrictions on low-efficiency coal-fired power plants are planning to conserve LNG. Also, South Korea demand increased 25% as cost optimization in power sector favored coal-fired power stations.

Looking at the metallurgical coal markets, they were broadly balanced through the quarter. One positive factor to note was an apparent shift in conditions to cost-based pricing rather than demand-driven pricing. This shift suggests supply has rebalanced to the point where the marginal cost of supply is setting spot prices. If that is the case, higher costs associated with diesel prices might be passed on to metallurgical coal customers.

I will now hand over to Kevin Su, our Chief Financial Officer, to address the financial position.

Thank you, Mark. For the past several quarters, we have talked about our strong financial position. The cash balance and access to debt allow us to continue Yancoal growth story with the cash flow acquisition. We ended the quarter with over $2 billion in the bank. As Mark mentioned, sales were lower this quarter due to factors such as the timing of the shipments, but the differential between production and sales always evens out over time. The cash flow will be caught up in the subsequent periods.

In the cash flow announcement, we said between [ USD 650 million and USD 850 million ] of the upfront payment will be funded with cash. The final amount will be influenced by cash accumulation between now and completion late in the third quarter. [ Kevin ] explained how we are projecting higher operating costs than we were when we set our guidance, but Mark also alluded to the higher realized prices we are likely achieve in the near term. We will determine the optimal cash amount as the completion date approaches.

One of the factors in the determination will be the outlook for the shareholders' distribution in the future periods. Speaking of distributions, just last week, we paid [ $0.12 ] per share fully franked final dividend for 2025. This took [ $161 ] million from our cash position.

I'll now hand back to Brendan to coordinate the Q&A session.

Thanks, Kevin, Mark, David and Sharif for highlighting the drivers of our first quarter performance. We will now move on to the question-and-answer session, starting with questions from the phone, then moving on to questions submitted via the webcast. Desmond, could you please initiate the process for questions via the phone?

[Operator Instructions] There are currently no questions on the phone. Please continue.

Thanks, Desmond. I'll come back to you shortly to check against the phone. In the meantime, let's take a look at the webcast questions coming through. Unsurprisingly, diesel is one of the topics at the top of the list. We did provide some comments through the earlier part of the webcast. But if we could look at some of the questions and address them once more, could we provide an update on the diesel shortage situation in Australia, whether we see any easing of the conditions and if coal production has been impacted as a result of diesel supply. I'll take that to mean both at a company level, but also at an industry-wide level, Sharif, could you provide an initial comment?

Yes. Thanks, Brendan. At the moment, we have stability and security of supply at the very least until the end of May. We are working very closely with our suppliers. And whilst at this point in time, there is uncertainty, we are preparing the operations in the event we do get some constrained supply for our operations. We haven't adjusted our production guidance or target for 2026 at this point with the exception of the cost increases that we expect to start to see flowing through with the higher diesel price. We do have operational flexibility, and it's not an apples-for-apples across all the operations.

Our underground mines use comparatively very low volumes of diesel, and we would anticipate to be materially less impacted than perhaps some of the open cut mines, albeit some of our open cut mines, we do have a higher proportion of electric powered equipment, draglines and road shovels, et cetera, that we will optimize. So at this point in time, we are looking at some options across particularly the larger open cut mines if the constrained supply does eventuate. But a direct supply constraint won't necessarily materialize as a direct impact on ROM production. And as you will note, we are prioritizing overburden removal in the front half of the year to allow us to free up the coal and production for the second half as well. So I might leave it there, Brendan.

Thanks, Sharif. It's a good and expansive answer. It covers a lot of the topics coming through -- sorry, a lot of the questions coming through on the topic of diesel. There is a question there that asks us to think ahead. And if the disruptions supply from the conflict in the Middle East was to last 50 or even 90 days, do we have a sense for what the potential diesel shortage might look like. And again, I'll ask that question both at a company level, but then more collectively at an industry level.

Yes. Thanks, Brendan. I wouldn't anticipate that diesel would be turned off completely for 50 or 90 days or likely is a reduction in supply. Now that gives us the opportunity to optimize the diesel usage within our minds to optimize our portfolio in terms of output.

And I would anticipate the industry would do this. This broadly would impact all mining operations throughout Australia and at different levels, given the makeup of the diesel usage for each of those operations and sites. At Yancoal, we understand this very well. We understand where we would prioritize our diesel usage to optimize our returns. But I don't, at this point in time, envisage a scenario where diesel is totally turned off.

Let's stay on that topic of diesel. With regards to our diesel supplies and having secured supplies until late May, are we able to provide any commentary about the nature of the longer-term contracts we have with refiners and suppliers or whether we have inventories on site or outside the mine site that we can draw upon?

Yes. I won't go into the detailed contractual detail of our suppliers. We are -- our sites are under supply obligations. Our sites have been maintained at the requisite supply levels on site. We do carry those stocks on site, but we do rely on our suppliers to maintain those supply levels on site. I might leave it there.

Okay. Perhaps just to clarify on that -- in the context of supplies to our mines, do we see any differentiation between Yancoal and the supplies of diesel it receives relative to other industry participants in the domestic coal producing sector?

I think materially, Yancoal is under long-term supply contracts. I would anticipate many of our peers to be of a similar nature, given that we are less exposed to the spot market for diesel, where some others may not be, but we're focused on Yancoal supply and security of supply.

Let's move off the topic of diesel for a moment and on to the coal markets. There's a question seeking clarification on how much thermal coal is sold at spot prices versus fixed-term contracts and how much of the increase in recent coal prices Yancoal has captured or will capture in its contract structures. Mark, could I turn to you for a comment on the contract structures and the price activity and what we're realizing now and going forward?

Yes. Thanks, Brendan. Happy to answer that question. Look, I suppose in line with the market shifts, we're seeing a lot more buying on index-based pricing. And even if it's a term contract, it can still be associated with an index-linked formula. So the old traditional fixed term contracts at a fixed price or at a negotiated price per quarter is changing to more of an index-linked price based on a period of time typically prior to shipment.

If it's a term contract where we have multiple shipments, those shipments are typically priced ahead of the delivery period. So we have a known position still based on an index. And most of our business is contracted in that manner these days. And this is why we always talk about this lagged impact on index pricing to realize pricing aspect. Does that cover the question?

I think that's sufficient. Desmond, I'll turn it back to you. We'll check if there's any questions coming through on the phone line, please.

[Operator Instructions] There are currently no questions on the phone. Please continue.

Okay. Back to the webcast questions, sticking with the topic of energy markets. The question coming through is, are we surprised by the relatively muted response from coal prices given the disruption to the global LNG market? And is it related to shoulder season demand weakness and running down of inventories. Mark, could I turn to you once again, please?

Sure. I suppose -- thanks, Brendan. In terms of being surprised, I think the answer is no. We realized that prior to March, most of our buyers had very high stocks. and we're well covered coming into this energy crisis caused by the Middle East conflict. As a result -- in addition to that, I should say, we're also going into the shoulder season, which the question also highlighted. So we weren't surprised that we've seen a dramatic increase in the paper prices to go up, but we've also seen a dramatic fall since the Strait has reopened. So we're assessing that. We're continually assessing. We are coming into the summer season. We hope that we'll see some more buying coming through.

Thanks, Mark. Let's move on to some questions in the financials. There's -- one of our participants has identified the relatively flat cash balance from end of December through to the end of March and seeking clarity on whether it is due to inventory build and normal seasonality, testing whether there's cost or CapEx components in the first quarter that were relevant to this outcome and any other factors that might be relevant to the circumstance. Kevin, could we turn to you, please?

Sure. Thanks, Brendan. I think that's the right observation. The lower cash balance largely driven by lower shipment, which reflected by a higher inventory [ base ]. From a CapEx perspective, everything is pretty consistent with what we have been planning. Are there are some other potential reasons contributing to the lower cash balance such as some tax payment for timing difference. But at end of the day, is largely driven by the shipment, as I just mentioned.

And Kevin, as you indicated in the comments earlier, the shipments balance out over time. So the difference between production and sales in any one period will normalize over time.

Yes, that's right. Yes.

Thanks, Kevin. On the topics of the financial setting, the question looking back to the acquisition of Kestrel, which we announced last week. And the question asking what is the outlook for dividends and dividend capacity going forward. Kevin, please?

Yes. I think -- thanks, Brendan. I think that's quite a simple feedback to the investors. It's not in our company's intention to change our dividend policy. We will still pay dividend as what we've been planning as 50% free cash flow and 50% NPAT, whichever is higher at the general guidance.

Thanks, Kevin.

Brendan, the other comment I'd make is the acquisition is expected to be immediately earnings per share and free cash flow accretive.

That's good observation. Thank you, Sharif. Just about through the end of the webcast questions. If anyone on the webcast has a question, please take the opportunity to type and submit as soon as you can. Desmond, I'll come back to you for a final check for questions on the phone.

[Operator Instructions] There are no questions from the line. Please continue.

Okay. I see one final question on the webcast. It's returning to the topic of diesel. And then the second question has come through, I'll get to both of these. First one on the topic of diesel. With the diesel supply that we've been talking about, is there any capacity for Yancoal to consider alternative power, structures, renewable energies and the likes. Sharif given the nature of our operations, do we have any flexibility to adjust our diesel consumption and usage?

I think this comes back to what David had mentioned previously, where we do have electrified equipment. So the underground operations, they're already electrified. We rely on electricity in the open cut mines, some of the mines have the electric shovels and the draglines and we would obviously see no impact on those that don't consume diesel. With regards to the heavy mobile as moving equipment, trucks and the like the transition to renewable energy on those is something at the moment that whilst the industry and we are certainly looking at is not readily available for deployment. So that would be something that couldn't be readily deployed immediately, i.e., battery electric truck technology, et cetera. That's still a little way down the track.

Now, we do have a few more questions coming through. Again, on the topic of diesel, can we comment on the influence on the potential for higher diesel prices to influence and affect our cash operating costs?

Yes. I think what we would say is what we've said here is our forecast cash operating cost of $90 to $98 per tonne our guidance provided at the start of the year. Our initial forecast suggests that the higher prices could push 2026 cost towards the top end of that range.

Okay. And speaking of costs, there's a question coming through asking what realized price Yancoal would need to achieve to be cash breakeven for 2026. There are several components to this. I appreciate the cash operating costs, which we've guided to and then the subsequent elements, CapEx and the like. It's not typically something we've been specific on. But Kevin, is there some commentary we could provide that would provide context for this question?

I think, Brendan, you made a very good summary already. It's a good indication from the guidance, we can look at operating cash cost. But at the same time, there's a big component need to be balanced, which is the CapEx. And I put these 2 together, largely going to decide what would be the cash breakeven. Yes, but at least not something we just openly disclose to the market.

Given currently, there's no debt, so there's no financing costs. We would make our tax payments typically on a monthly basis of pay-as-you-go. There'll be those components and the corporate overheads. So it would be dependent on all those elements being aggregated to reach an estimate for the breakeven price.

There's a couple of questions on the acquisition. And Kevin, we momentarily -- a moment ago, we talked about the payout ratio and the dividend structure that the company has in place. If the acquisition does not affect the dividends, does that mean the payout ratio remains above or around 50%?

Thanks Brendan. Our general guidance is about 50% of free cash and/or 50% NPAT, whichever is higher. In the case, the free cash flow is better than NPAT, which has happened in the past few years, you will notice the payout ratio could be above 50%, and we are not changing our plan.

Okay. Kevin, I'll stay with you. One of the questions coming through is regarding the cost of debt we're using to fund the acquisition. Is there anything we can say on the cost of debt that we have on that facility that we plan to put in place?

Thanks, Brendan. I would love to share the cost but unfortunately, we are bound by the confidentiality agreement with the financiers. So we are not able to disclose precisely how much funding costs we are paying and will be paying. However, we just want to assure our investors, Yancoal is very proud about our funding history. We always have a very competitive facility with us. And then in the future, when we disclose our annual results, we normally disclose the average earning cost in our financial results. So that's a good place for any interested investors to have a look.

Thanks, Kevin. We've had several questions on these availability and production impacts at the operational level. But a different topic coming through now is the comment on shipping freight, fuel costs, what that could potentially mean for our customers and the delivery of seaborne coal to the international marketplace. Mark, do you have any thoughts you could provide on this topic?

Sure. Yes. Thanks, Brendan. Look, we have seen charter party rates appreciate in terms of reports due to the cost of fuel and bunkering. In the height of the crisis, we also saw some countries restrict bunkering and we saw a lot of vessel diversions from normal bunkering ports to other ports bunkering which ended up delaying some spending. But more recently, we've basically seen a return to normal bunkering and very minimal impact on the business. Vessels are reviving at their scheduled time of arrival, and we're not seeing any delays in natural physical arrivals.

Okay. So at this point in time, there's no suggestion that we could be looking at circumstances similar to 2022 with supply constraints, albeit at that point in time was largely weather related. But in terms of current market conditions and supply constraints that we might potentially encounter in the international trade?

Yes. No, the supply is still quite strong from a coal supply point of view. The LNG supply comes from a variety of different markets. And we haven't seen a very strong switch of the coal to -- from LNG to coal. And in terms of coal usage, we haven't seen that jump as expected due to the energy crisis.

But is it potentially still yet to play out in its entirety, given the time lag between supply and delivery in oil and gas markets and then the carryover to coal markets and then the regional impacts around the world?

Yes, we could still see that throughout the -- especially towards the end of Q2 coming into the summer burn period when demand picks up, we could see some impact from the crisis -- lagged impact from the crisis.

Thanks, Mark. Just one question has come back through again. It was on the topic of renewable energy and asking whether Yancoal considers renewable energy. I asked it previously in the context of operational supply, but is there a broader thought we need to contemplate in terms of general power usage and renewable energy consumption and energy mix across the company?

Look, I think -- Mark Jacobs here. We have looked at renewable energy opportunities in the past, and we considered solar in the past. The problem that we have is that all of our operations are 24-hour operations. And so we're still reliant on the grid. We are, however, very close to getting state government approval for our Stratford Pump hydro projects which will provide long duration storage of renewable energy into the grid. So that is one opportunity that we're continuing to investigate.

Thank you, Mark, and thanks to everyone on the call. I've addressed all the questions coming through on the webcast. Sharif, could I please hand across to you to provide the closing remarks.

Thanks, Brendan. This is the fourth time we've engaged with the market since the start of 2026. In January, following the fourth quarter report, we highlighted the production records delivered in 2025, thanks to our world-class assets run by some of the most capable people in the industry. With all that is happening in global energy markets and our acquisition of Kestrel, it's important to remember our large-scale, low-cost thermal coal mines are the foundation of our business. We delivered a great production performance last year and hope to improve upon it this year.

In February, following the 2025 results, we talked about continuing to reward our shareholders with fully franked dividends. We also highlighted the strong net cash position and continued access to debt markets that provided considerable financial flexibility. Then just last week, we were in a position to tell you how we'd utilize that financial flexibility by acquiring Kestrel Coal Mine. We strongly believe Kestrel is a high quality and attractive acquisition that will deliver on Yancoal's value-adding growth aspirations and positions the business to deliver strong performance and shareholder returns in the future. We see this acquisition as another great step forward for the business.

Through all these discussions, I see a common theme, we deliver on what we say we will do. This starts with operating our mines safely and efficiently to deliver great operational performances. We reward our shareholders with dividends while being disciplined with our capital management allocations. Then when the right opportunity was available, we acted decisively to continue growing the business with a great asset that will enhance our portfolio.

Thank you once again for joining us. I hope you have a great day.

Thank you, Sharif. Desmond, could you please conclude the call.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Yancoal's Acquisition of Kestrel Coal Mine Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to turn the call over to Head of Investor Relations, Mr. Brendan Fitzpatrick. Thank you. Please go ahead.

Thank you, Desmond, and thank you to everyone joining us for this briefing on Yancoal's acquisition of an 80% stake in the Kestrel Coal Mine. We have Sharif Burra, our Chief Executive Officer; and Kevin Su, our Chief Financial Officer, to provide an overview of the acquisition, and several members of Yancoal's executive leadership team are also present to participate in the question-and-answer session.

Desmond mentioned the phone lines. There is also the opportunity to submit written questions via the webcast. You can do that at any point.

The commentary provided today is based on the announcement and presentation published on the Australian Securities Exchange and the Stock Exchange of Hong Kong announcement platforms last night.

Slides 2 and 3 contain notices and disclaimers relevant to today's presentation and the forward-looking statements it contains. Please make yourself familiar with the content of these 2 slides.

Throughout the presentation, we use Australian dollars unless otherwise stated.

Sharif will now provide the transaction overview.

Thanks, Brendan, and thank you to everyone joining us on the webcast. We really appreciate you taking the time at short notice to hear about this exciting update. Before looking at the transaction in more detail, I want to take a moment to thank all the people, both within Yancoal and our corporate advisers, who contributed to getting us to this point. It takes an incredible amount of effort from teams working cohesively to bring an acquisition of this nature to fruition.

Slide 5 provides the transaction summary. Last night, we announced that Yancoal has agreed with EMR and Adaro to acquire their 80% ownership in the Kestrel Coal Mine through the 100% acquisition of the Kestrel Coal Group.

Kestrel is a high-quality, long-life metallurgical coal mine, which we view as strategically aligned with our operating strengths. Being a producing mine, from the date of completion, Kestrel will immediately contribute to our production volumes and operating cash flows and will increase the metallurgical coal contribution of our portfolio.

On completion, Yancoal will become the operator and majority owner of the mine. Our partner in the mine will be Mitsui, which holds the other 20%. We consider Mitsui a strong partner and look forward to working collaboratively with them as co-owners of the Kestrel mine.

The upfront consideration is USD 1.85 billion. This includes a USD 40 million deposit. There is contingent cash consideration, which is capped at USD 550 million, with payments only made if annual benchmark coal prices exceed a threshold price. We will fund the upfront cash consideration through existing cash on our balance sheet and a USD 1.2 billion acquisition facility. We also have in place a USD 200 million working capital facility for additional support.

If payments are required in the future for the contingent cash consideration, we intend to fund them from operating cash flows as they represent an upside revenue share arrangement. The acquisition is subject to conditions and approvals. Provided all the conditions are met, we aim to complete the transaction towards the end of the September quarter this year.

Turning to Slide 6. The map shows Kestrel's location in the Queensland Bowen Basin and its position relative to other Yancoal mines and regional infrastructure.

Why do we like the acquisition? It is a large-scale operation that produced 5.9 million tonnes of high-quality metallurgical coal last year. It enhances our existing portfolio by adding a significant hard coking coal volume to our product mix. It has a long mine life, 25 years of production fully underpinned by 164 million tonnes of marketable reserves. It has strong margins. At last year's coal prices and with cash operating costs of AUD 147 per tonne, Kestrel was in the top 35% of global seaborne metallurgical supply on the margin curve. It has infrastructure and logistics in place and proximity to other Yancoal mines.

Looking at Slide 7. We can see the acquisition in the context of Yancoal's 22-year journey to prominence in the Australian coal sector. It started with a single mine, Austar, back in 2004. And I'm sure many of you know this is where I started my journey with Yancoal in 2005, a technical underground operation where I was the underground mine manager.

Over the next 2 decades, the company acquired, expanded and optimized mines to become Australia's second largest coal miner. We see this acquisition as continuing our strong track record of value creation through selective acquisitions.

I'll now hand over to Kevin to take a closer look at the strategic rationale for the acquisition.

Thank you, Sharif. The next 5 slides explore the 5 key points on Slide 9. There are scale and diversification, longevity and margin, metallurgical coal market exposure, cash flow contribution at attractive multiples and utilization of cash and debt structures.

Slide 10 looks at the increased scale and diversification. We see the attributable saleable production extending our position as the largest pure-play coal company listed on the ASX. However, we're not adding volume just to increase the short-term output. The additional reserves represent about 17% of the pro forma multiple reserves. This highlights that it's not just additional volume, but the long-term volume. Using 2025 production data as a reference, we see Kestrel diversifying both our product mix and our geographic profile.

Slide 11 compares Kestrel against other underground coal mines in Australia. It is the largest underground coal mine, just ahead of our own Moolarben mine and by far, the largest metallurgical underground mine. It has the third largest marketable reserve base of any underground mine. These reserves support a 25-year mine life.

And importantly, it's a productive mine. Using production volumes per employee as a productivity measure, it ranks second behind our Moolarben mine. Yancoal knows how to operate large, efficient long-life coal mines. So we see ourselves as more than capable of successfully integrating Kestrel into our portfolio.

Slide 12 provides information on the type of coal produced by Kestrel. 80% of production is hard coking coal, which is priced off the Platts Premium Low Vol Hard Coking Coal Index. This product is very well regarded by Kestrel's customers and is one we don't have in our current product mix. The remaining 20% is typically sold as high energy thermal coal, priced against the globalCOAL Newcastle Index. This is similar to the thermal coal we produce from our Hunter Valley mines. We see Kestrel's products as enhancing our position in international coal markets.

On Slide 13, we have to project -- we have projections for the metallurgical coal markets out to 2050, a horizon raised by Kestrel's 25-year mine life. Whilst the metallurgical coal prices have been subdued in recent times, our view, which is supported by external industry analysis, is that supply deficit likely emerges in the future.

The increased global demand will be driven by Asia and in particular, India. Kestrel is already supplying into India with over 30% of sales going there in 2025. The additional sales to India further diversifies our customer base. Kestrel's next 3 largest destinations for the sales are ones where we already have strong customer relationships.

Moving on to Slide 14, we see the EBITDA generated by Kestrel over the past 5 years and importantly, the strong EBITDA margins. These margins are very similar to Yancoal's margins over the same period, further demonstrating that this acquisition should complement our existing operating margins. Using the 2025 EBITDA and an upfront consideration as a proxy for enterprise value, the EV to EBITDA multiple we are paying for Kestrel is below a peer group average. In summary, we see the acquisition adding operating cash flow at margins similar to our existing portfolio at a favorable multiple.

Slide 15 gives additional information on the funding structure. We will utilize USD 650 million to USD 850 million from our cash balance. The final amount will be influenced by our cash balance at completion, which in turn will be most significantly influenced by our achieved coal price between now and completion. The remainder will be funded through a USD 1.2 billion financing facility with additional support available through a USD 200 million working capital facility.

The funding structure allows us to maintain a strong financial position with a healthy cash balance to support operating requirements and dividend distribution in line with the company's constitution.

On a 2025 pro forma basis, our net debt-to-EBITDA leverage ratio would be 0.9 to 1.1x and our gearing would be 15% to 18%. In the context of our broader capital management objectives, we see this as appropriate accounts.

I'll now hand back to Sharif to look at the Kestrel mine more closely.

Thank you, Kevin. Slide 17 recaps some of the information we've seen earlier in the presentation. Kestrel is a large-scale operation, producing predominantly high-quality metallurgical coal and has a long mine life. It produced almost 6 million tonnes of saleable coal in 2025 on a 100% basis. Our share of the saleable coal production will be 80%. Over the past 8 years, about AUD 1.4 billion has been invested in the mine and infrastructure. We view it as being in good condition and well-placed to operate efficiently in the coming years. Existing mine plan incorporates larger and more productive longwall panel in future years. These are referred to as the 600 and 700 series.

On Slide 18, we see the past operational performance. Kestrel has a strong history of yield and saleable coal production. The chart on the lower right of the page shows the margin curve for global seaborne metallurgical coal supply. Unlike a cost curve, which only considers production costs, margin curve captures the difference between realized price and cash operating costs. This normalizes for coal quality and gives a truer sense of relative position against global peers. Kestrel sits in the top 35% of global metallurgical coal supply on the margin curve. We view this as one of the clearest indicators of its quality.

Slide 19 shows an aerial view of the mine and its infrastructure. As mentioned earlier, it's been well funded in the past and the infrastructure is in good condition. The 10.5 million tonnes per annum capacity in the coal handling and preparation plant exceeds current run-of-mine coal production rates, ensuring it will not be a constraint.

Slide 20 has additional information on the logistics. The 2 main points to note are contracted rail volumes of about 6.8 million tonnes per annum and contracted port capacity of 7.8 million tonnes per annum. Both contracts provide excess capacity over the typical annual production rate, again, ensuring neither will be a constraint.

Slide 21 provides a detailed comparison of our existing mines and Kestrel. Kestrel complements and balances the existing portfolio with regard to geographical spread, mine type, product type and scale of production.

We included Slide 22 as a reminder of how Yancoal performed after our last major transaction, the acquisition of interests in the MTW and HVO mines in 2017. Since 2018, we've returned over AUD 5.3 billion to shareholders as dividends. More than half of this amount was fully franked. We repaid debt early, and we're in a net cash position within 5 years of that acquisition.

Following the Kestrel acquisition, we will put our balance sheet back to work. But as Kevin mentioned earlier, the pro forma gearing ratio would be approximately 15% to 18%, half the level it was after our last acquisition. Post completion, we see Yancoal well placed to continue its capital management objectives of balancing our financial position, distribution to shareholders and future growth initiatives.

The final slide is an adaptation of the slide that closed out our 2025 results presentation in February. The Kestrel acquisition allows us to build on the outlook for this year and beyond. We have an experienced management team and workforce, and we are excited about working with the team at Kestrel and Mitsui.

Scale and operating margins are 2 key elements that drive our performance. We see Kestrel contributing to both of these. The transaction will apply an appropriate mix of cash and debt that leverages our balance sheet strength.

We have a proven history of returning cash to shareholders in accordance with our dividend policy and see the cash flow from Kestrel contributing to this capability.

Post acquisition, we still aim to create future value for shareholders by continuing to deliver strong production and cost control performance with balanced capital management.

We strongly believe Kestrel is a high-quality and attractive acquisition that will deliver on Yancoal's value-adding growth aspirations and positions the business to deliver strong performance and shareholder returns in the future.

Now I'll hand back to Brendan to open the Q&A.

Thank you, Sharif and Kevin, for taking us through this exciting update on the business. We will now move on to the question-and-answer session, starting with questions from the phone and then moving to questions submitted via the webcast. Desmond, could you please initiate the process for questions from the phone?

[Operator Instructions] The first question from the line comes from Glyn Lawcock from Barrenjoey.

A couple of questions. Firstly, just once you take control of the asset after regulatory approval, do you have any thoughts around whether you would sell down to a steel mill? I mean obviously, previous acquirers have all chosen to sell down. Is that something you consider? Or given the financial position the company, there's no need? And then I have a second question.

Sharif?

Yes. Look, thank you for the question. It's not something we're currently considering.

Okay. That's great. And then I'm conscious you haven't yet taken control of the assets, but obviously, you did a lot of due diligence. Just a couple of questions around that. The cost base, as you said, AUD 147 a tonne, do you see much opportunity to do much with that based on what you've seen so far with the asset?

And then there seems to be excess port and rail associated with the Kestrel mine relative to the 6 million tonnes. Is there capability across the rest of your portfolio to maybe take advantage of that once you get ownership?

Yes. Look, thanks for the question. Our primary objective is to continue operating the Kestrel mine as a successful, productive, well-managed coal mine. And so we will obviously spend our time and have a good look at the asset and look for opportunities with regards to costs. With regards to logistics, again, we haven't factored in any synergistic benefits with regards to the deal at this stage, but we'll certainly be focused on those opportunities as and if they present once we have acquisition or once we've taken control of the Kestrel mine.

We have our next question from the line of Lawrence Lau of BOCI.

I have a few. First of all, I realize that the processing yield of this mine is quite high, 75%, 76%. I just want to like to know, do you think this kind of processing yield can be sustained in the future?

Secondly, I understand that Mitsui holds the pre-emptive rights. Just wonder if you have talked to Mitsui at this stage? And what is the attitude of Mitsui about this transaction?

And thirdly, what is the estimated maintenance CapEx of this mine after you take over?

And finally, I realize that there's an estimated transaction cost of AUD 200 million -- sorry, USD 200 million. I just would like to know, will that be charged against your P&L or will it be considered as part of the consideration?

Okay. Lawrence, I appreciate that 4 questions there. Let's go back to the start, looking at the operational profile that 75% yield that the assets delivered in the past. What can we say about the potential yield going forward, do we think?

Yes. Thanks, Lawrence. As a first port of call, I'd point you to Appendix 3 of the market release and the competent person's report and the JORC statement, and all of that information should be in there and quite a comprehensive amount of detail.

With regards to Mitsui, I'm not going to comment on Mitsui. Having said that, we have a very good relationship with Mitsui. We hold them in the highest regard, and we really look forward to working with them at Kestrel.

Thanks, Sharif. The next question of the 4 was maintenance CapEx. Perhaps, Kevin, do we have anything that we can offer on a view for maintenance CapEx going forward? Or is it too early at this point to have established a view?

We do have a technical model from our due diligence work, but we are not in a position to disclose better forecast for now.

And then that final question from Lawrence, the $200 million that's been identified as transaction costs. The question was how would that be expensed and recognized on our income statement?

Lawrence, out of the $200 million transaction costs we indicated, majority of it is stamp duty. So for stamp duty purpose, we have to recognize it as the expense.

Lawrence, was there anything further?

I think that's good enough at this stage.

Desmond, do we have further phone line questions?

We have follow-up questions from Glyn Lawcock from Barrenjoey.

Just wanted to understand the balance sheet of Kestrel. Could you maybe provide a little bit of color around the actual balance sheet that you'll be inheriting? And will that come across? Or will it come across with just inventory? And then I had a second one after that.

Thank you, Glyn. I'll look to Kevin in the first instance. The Kestrel balance sheet, what can we say about the nature of the assets and liabilities that we carry across upon completion?

First of all, the acquisition is on cash-free, debt-free basis. But one way to look at the bidding is clearly bid on enterprise value. And if we look at the existing balance sheet structure, they do have some debt to support the previous acquisition since 2018, which is something we need to adjust as part of the completion counts. But at the end of the day, as I mentioned, the acquisition basis is cash-free, debt-free.

Okay. And then just the second question was just around the coal. You talked about it being 80% metallurgical, 20% thermal. I just wonder if you could maybe break down a little bit more. Is it all -- is it a mixture of sort of semi-soft coking coal and semihard or -- and what sort of price volatilities we should be expecting for the met mix? And then also similarly for the thermal, any sort of comments you can help us understand the price realizations for the coal types you expect from Kestrel?

Glyn, certainly appreciate the interest in that topic from the market perspective. We do have the competent person's statement, which provides a detailed view of the assets. But in terms of the product mix, what's probably the most reasonable thing to say at this point in time is the 80%, 20% split as indicated on Slide 12, that's indicative.

The production profile will vary over time depending on which locations are being mined, the coal quality and even how the wash plant is utilized to optimize output and meet customer requirements. I expect our marketing team will be looking to leverage their capabilities in that regard.

So I think we'll leave it at the indicative level at this point in time. Once we have move to acquisition and operation of the asset would be in a far better position to provide a more definitive view going forward.

I'll move on to some webcast questions now. We'll come back to the phone lines later to see if anything else has come through. Something high level to start with, we're putting some of our balance sheet to work. There's interest in knowing how our capital management plan will look going forward, whether there'd be any shift in priorities, what the transaction might mean for dividend policy in the forward periods? Kevin, could I look to you in the first instance, please?

Sure. Thanks, Brendan. In short, Yancoal will not change our position about dividends. Yancoal has a strong track record of displaying capital management and returning value to shareholders.

Following the transaction, the company expects to retain such flexibility to balance objectives across shareholder returns, balance sheet strength and funding future growth. And I put a few numbers here, and you can see where you disclosed our cash balance at more than AUD 2.5 billion right as of the end of last year. And in the presentation, we quoted, the upfront cash potentially going to be USD 650 million to USD 850 million, which equivalent to about AUD 900 million to AUD 1.2 billion. But when we disclosed last time, that's about AUD 2.1 billion of cash. As such, we do have sufficient liquidity, yes.

Thanks, Kevin. Let's stay on the topic of the balance sheet and the capital management. Several questions coming through of a similar topic, so I'll amalgamate them. The general thrust of the questions are the USD 1.4 billion debt facility. What can we say about that in terms of the interest rate it will carry, the finances, the tenure of the facility and how that will fit into our balance sheet?

We would love to share. But for now, a lot of key terms, including the one Brendan just mentioned, subject to confidentiality provisions. As a result, we are not able to disclose externally.

But the one thing we can assure the market, the interest rate is very market consistent and competitive for a 5-year facility, and this is in line with the prevailing international syndicated loan market conditions.

Let's extend on that topic. Would there be a scenario where the balance sheet and the funding structures could be restructured over time? Is there a process where the bonds or other elements could be utilized at some point subsequently?

The short answer is yes. As of today, we do believe we have the most effective acquisition funding structure, but we will keep improving it. And if we do identify in the future better opportunities by refinancing the facility, we can achieve a better cost profile, we could further improve the financing structure.

Thank you, Kevin. Let's move on to the topic of some of the elements on the income statement that are coming through. And I'll link a few questions here. There's one that's observing the difference between the parent EBITDA and net income for the reported 2025 period from Kestrel and an extension of that or a variation on that is the price-to-earnings ratio relative to the EV to EBITDA multiples that we did carry in the presentation pack.

What can we say about that past performance in 2025 and any future outlook for earnings, EBITDA multiples going forward? Kevin, I think I'll turn to you again for this one.

Thanks, Brendan. First of all, the valuation is very comprehensive, but from a complete picture perspective, we probably will not look at this whole acquisition valuation from PE perspective, but we probably will look at EV/EBITDA reserve multiple. And then we also need to consider the life of mine is 25 years.

And then another reason why probably it's not the best idea to refer to 2025 EBITDA or PBT as there are a lot of reasons for the 2025 profit at a lower point, such as a very relatively low average coal price. They do have some impact from a costing perspective. We know there's some abnormal items in 2025. Also they have some sales volume issue as well. As a result, without the intention to further elaborating, we do feel we need to have more comprehensive valuation methodology around this number.

Thank you, Kevin. Desmond, could I come back to you to check for the phone line, please?

We do have a question from the line of Peter Wang of CICC.

So most of the questions have already been addressed by the company. So I would just like to follow up with 2 more questions. Firstly, regarding financials of the Kestrel mine itself, what was the ASP for the mine in 2025 and the cash cost, including royalties, what will that be?

Peter, I caught the first part of the question. You were asking about the achieved sale price in 2025 for Kestrel. I missed the second part of the question. Could you repeat that part, please?

Yes. And then what about the cash costs including royalties?

Cash costs including royalties. Okay. So we do have that -- the Free On Board cash costs that's mentioned in the slide pack at AUD 147, Free On Board. The royalties would be calculated on that Queensland royalty structure, which is tiered. I don't have that number at hand. But if we do have a comment on the achieved sale price, then someone will be able to back calculate it outside the call. But the -- I'll just look out to anyone. Do we have the achieved sale price?

USD 145 per tonne.

USD 145 per tonne in 2025 was the achieved sale price.

I see. That's the branded ASP, right?

That's right. What we would refer to as the ASP.

Yes. Okay, I see. So I will just move to my second question. Do you have any plans to expand the production level at Kestrel or you would just continue to maintain the production at around 6 million.

Okay. The question is production expansion beyond the current run rate of 6 million tonnes on a 100% basis of saleable products. Sharif, will hand to you.

Yes, our intention is to run the asset as it has been run at that indicative production level. Having said that, once we have operational control, we'll always look for opportunities for further improvement.

I'll go back to the webcast. I appreciate there are people have lodged questions concurrently. So there is some overlap and some that have already been addressed. I'm looking at debt facilities and tenor that's been covered.

There's another question on the debt. It notes we raised the debt in U.S. dollars. Was there any consideration to alternate currencies such as an RMB borrowing strategy? Fortescue was an example of that, that was provided by the person asking the question.

Thanks, Brendan. Yancoal is very open for all sort of financing options, as Sharif mentioned, and including the RMB facility, which we have very strong relationship with many Chinese banks to achieve a lower interest rate, as the question just mentioned. However, it's slightly more complicated topic as this involves hedging foreign exchange risk, which need to be also considered jointly.

Thank you, Kevin. We've touched on the cash-free, debt-free basis. Looking at the operational aspect of the mine. There's a question about the current mining leases, development licenses, environmental approvals and so on, asking for some sort of comment on time line and renewal processes. Mindful that we've talked about the 25-year mine life and looking for some context. Perhaps, I'll turn to Sharif initially and then move to more detailed observations.

Thanks. I think the first point I'll make here relates to the Kestrel West approvals, which are being progressed well by the site team, sufficient time frame to approve -- to obtain these approvals, ahead of commencement of mining in Kestrel West, and this is scheduled for the early 2030s. And we'll obviously provide an update to the market as and when one is available when we have operational control.

Yes. With regards to especially MDL 182, yes, they are -- those tenements, although it comes up for renewal, that work currently ongoing, and that application needs to go in the next month to be in time for the required 6 months before that expiry. But other than that, there's no other issues on the MDLs.

I think fair to say all of these would be seen as business as normal processes to work through. The reserves underpin the mine life. The mining license covers the reserve that sits in the allocated region.

Let's move on to the next question. Mitsui's pre-emptive rights, we've touched on that earlier. Something of a more technical nature with regards to the current longwall panels, the future longwall panels. There's a reference to currently mining in the 500 series, moving to the 600 or 700 series some years into the future. Do we have any knowledge or comment on faults' depth, coal mining aspects on productivity and whether that links through to a view on yield in past periods compared to the future periods?

Yes. Again, Brendan, I'd point to Appendix 3 of the market release, the competent person's report, and there's certainly sufficient detail within that, I believe, to answer most of those questions.

If I can add on to that, there's -- as part of the due diligence work, we do assess all these areas. We assess the faults, the work that's gone in, the integrity and the confidence of it. So all of that has been assessed as part of the due diligence.

Thanks very much. Looking at the price realization and the benchmarks we referenced, the reference in the materials, the Platts Premium Low Vol Hard Coking Coal benchmark, the relatively -- what relativities are assumed in the contingent consideration modeling. We do have a footnote in the announcement that provides an example. But Kevin, perhaps if you could just reiterate that example of how the contingent cash consideration could be calculated?

Yes. It is basically when the average sale price -- when the index -- hard coking coal index price above 2025 on annual basis -- average annual basis, then we will based on the relativity and to profit share 30% of the revenue. However, that relativity as of what we have announced is 85% is on Page 3.

The footnote 10, we have example how this calculation will be done, and we quoted a realized pricing relativity at 85%, which is only indicated only, and this may vary depends on the future production conditions.

Thank you, Kevin. There is a question of a similar nature. It's identifying that the coal quality from Kestrel while priced against that benchmark is somewhat different and the price realization or the discount achieved. That's what we've been talking about in the past periods, it's generally been about the 85%, but that would vary at times depending on market conditions. I think that's a reasonable observation.

Is there anything additional to make on that? No, I'm getting head shakes around the table.

Another question on net debt, which we've covered. Going back to some higher-level topics of conversation. We touched earlier on about capital management and use of the balance sheet, having positioned ourselves to acquire the Kestrel mine, what is Yancoal thinking about future growth opportunities, M&A scenarios and what the company might or might not pursue in forward periods.

Shar, could I turn to you for a comment on how we might think about growth beyond this opportunity that we've positioned ourselves for.

I think with regards to other M&A activity, I won't comment on market speculation. Our focus at the moment is on executing the announced acquisition of Kestrel. There is potential for mine life extension and regional upside at Kestrel, including progression into additional mining areas and broader opportunities within the surrounding hub. But we will assess and look at those opportunities over the course of time.

Thanks, Shar. And another high-level question. Looking at the capital structure of the business, we talked about the potential for refinancing or restructuring the balance sheet earlier, Kevin. Is there any scenario where the free float of Yancoal could be increased? And if so, how might that play out?

Yes, that's a very good question. We have been looking into any potential options could further improve Yancoal's free float, but this largely depends on 2 major shareholders, which is Yankuang Energy and Shandong, who have been holding about 70% of Yancoal shares. Any willingness for them to disclose in the market? And also, there are some other potential equity raising opportunity could further improve the free float, but this is going to be considered in due course at a later stage.

Thank you, Kevin. Let's look to the coal markets now. I'll come to Mark Salem, our EGM Marketing and Logistics, who joins us online. One of the questions we have coming through, Mark, is, what is the company's view on the future coal price and demand from Asia?

And then I'll extend to some additional comments about the Kestrel product. But Mark, if I could turn to you in the first instance, a comment on the company's broad view on the future of the price for coal and demand in Asia.

Sure. Thanks, Brendan. Sorry, I'm just remote and I hope there's no feedback.

No, confirming the sound quality is coming through well. Please proceed.

Okay. Thank you. Look, I think from a hard coking coal point of view, as Slide 13 shows, there's a definite deficit of supply going into the 2030s. And that's one of the attractions of increasing our exposure to hard coking coal. That market will continue to grow. As you can see the growth also on Slide 13 with the growth of India and Southeast Asia.

If you look at typical supply-demand dynamics, if there's a shortage of supply with increased demand, that should see strong prices moving forward. So naturally, any forward price assumptions are based on a lot of analysis, and we use our independent forecasters to help us and assist us in forming our forward pricing views, which, of course, we can't necessarily disclose.

In terms of the market mix, again, it will expose Yancoal to a greater market in India. Currently, our exposure is only around 3% to 4% of our sales currently are into India, whereas the Kestrel profile will increase that exposure into the growing Indian market.

Thanks, Mark. That leads into another question, which talks about the market breakdown of Kestrel. We can see that we provided that pie chart in the presentation pack on Slide 13, India at just over 30% being the largest single destination and then North Asia, where we already have existing customer relationships.

One question we have on the product and the links to the customer breakdown is, with Mitsui as the 20% partner, how does that work in terms of the offtake from the production volumes, the marketing rights? What are we able to say about the product split and how it enters the market and influences or where it goes?

Thanks, Brendan. Look, I can't really comment on Mitsui's position at the moment because naturally, a lot of the more commercial confidential information will only become available to us now. But I understand Mitsui has a very cooperative relationship with the markets, especially in Japan.

They don't actually have an offtake per se as we understand currently, but we will be working very closely with Mitsui to develop those markets.

In relation to the broader marketing mix, a lot of the Japan, Korea, Taiwan steel mills are existing customers of the Yancoal portfolio. And so we already have strong relationships with those customers.

Sorry to cut you off, keep going.

No, I was just wondering, did that answer the question?

Yes. I think that was very satisfactory. Thank you. I appreciate we've got 10 minutes left until the scheduled termination of the webcast.

Desmond, I'll come back to you just to check if we have any more questions coming through on the phone lines. And if not, I'll use the final 10 minutes to continue with webcast questions. Desmond, any phone line, please?

No questions at this line. Please continue.

Thank you. Looking at some of the operational questions in detail, there was an observation that there may have been some past production issues at the Kestrel mine. Looking for some comment or clarity on what may have occurred in the past, the current situation and how Yancoal would intend to operate the mine once it becomes the operational control entity.

Thanks, Brendan. I think this probably refers to the frictional ignition event in December of 2024, which Kestrel had on longwall 501 when the shearer of maingate drum contacted seam well and ignited a small pop of methane at the coalface, resulting in production interruption for about 3 weeks. But the operation was safely and successfully returned to steady state thereafter.

This was certainly one of the key areas of technical due diligence for us. We spent a lot of time building our understanding of operating procedures and the geology and the gassiness of the resource, et cetera. So we're quite confident with our technical expertise and experience regarding that aspect of the Kestrel mine.

Okay. And pulling that through revisiting that topic of CapEx. We talked about the total spend over the past several years. In the context of CapEx going forwards, we'll assess that in the future. But as we note that the CapEx has been -- the asset has been well capitalized, and we certainly don't see it needing undue CapEx in the short term.

Thanks, Brendan. The coal handling preparation plant had significant capital investment as has the longwall and the second set of longwall equipment in addition to gas drainage activities in the current mining areas.

Okay. There are several questions coming through that are financial in nature. So Kevin, I'll look to you for some of these questions.

With regards to the cash contingent component, the USD 550 million we've identified. Is there any inflation adjustment? Does the USD 225 average price reflect the operational cost inflation? And is there anything that -- or any nuances that we need to be aware of with that cash contingent calculation?

The $550 million contingent payment is not inflation adjusted. The USD 225 per tonne average price is the nominal price to be used for calculation.

Thanks, Kevin. On Slide 14, we present the EBITDA over the past 5 years. There's a question asking what would the free cash flow have been after CapEx? Do we have the details at hand to provide a response to that?

We do have free cash flow post CapEx, but we have a lot of numbers. So happy to disclose. For example , in -- I'll take 2023 as example, is $320 million and 2024 is $192 million and 2025 post CapEx is $124 million.

Thanks, Kevin. So obviously, linking to the EBITDA profile, we can see on Slide 14, there are those coal price cycles working through for Kestrel, much the same way as we've seen for the Yancoal portfolio over a similar time frame, expansion and contraction of EBITDA and free cash flow with the coal price cycle.

We've got another question here. The mine profits on a 100% basis, identified as being USD 36 million in 2025 and US -- call it, USD 14 million in 2024. What can we say about the profitability in past years and how we've viewed the asset acquisition and the value opportunity for Yancoal going forward? Kevin, if I could turn to you.

Sure. Thanks, Brendan. As I mentioned earlier, take 2025 as example, we appreciate the profit in 2025 was unfortunately low, but it's due to quite a few reasons we have already identified. First of all, the main driver was very low average sales price. As I mentioned, the ASP was USD 145 per tonne. This is comparatively much lower than the previous one.

And also during the year, we also understand due to the friction ignition accident what, Sharif, just mentioned, they also have an internal mix -- product mix change as a result of the higher thermal mix compared with the coking coal proportion.

And then due to the whole -- to manage the issue and also, they need to put in all the cooling cost and also carbon tax and plus due to the ignition events and they have -- they reduced the production and then also the sales. As a result, we had much lower sales. That's about 5.4 million shipment versus 8.2 million run time.

So there's a lot of reason to just unfortunately contribute to a lower profit in 2025. And that's exactly what I have been considering in the valuation model, make sure in the future, we consider all these different drivers from a valuation perspective.

Thank you, Kevin. A few people have asked a similar question. Curious to know if we can provide the identity or the breakdown of the lenders for the debt facility. You mentioned earlier it's that commercial and confidence terms. I don't know if we're in a position to disclose that.

We are not able to disclose the identity of the banks. But one thing we could disclose is in the -- after completion in our annual accounts, there will be an average funding cost, which is a standard disclosure item. By then, you could see the average funding cost.

Thank you, Kevin. Coming back to that concept of completion, we've targeted completion by the end of third quarter this calendar year. Are there any specific undertakings or conditions that Yancoal anticipates from FIRB regarding the ownership structure, any other conditions that might be relevant to reaching completion as planned? Perhaps Sharif in the first instance for a view on the completion date and the requirements we have for that.

This is where I finish. But if you want to make a...

Thanks, Brendan. Yes, look, we've nominated our completion date, and we'll obviously be working towards that.

With regards to FIRB, I'm not going to comment on any anticipated conditions that may or may not eventuate in that regard. What I would say is if you look at the history of Yancoal, we have a very strong track record of merger and acquisition, and I'm confident that we will be in a strong position to obtain these approvals moving forward.

Thank you, Sharif. I appreciate we're right on the 12:00 cut-off mark. I can see there are several more questions coming through. I apologize that we've not necessarily covered off each and every question that the participants have had, but I am available, the team is available. Please reach out through the e-mail channel in the first instance, and we will follow up with any unresolved questions that exist.

But if Sharif, I could hand over to you to provide the closing remarks, and we'll move to conclude the call on time shortly.

Thanks, Brendan. As I said at the start of the call, I thank you all for joining us on limited notice to hear about the acquisition and what it will mean for Yancoal.

We strongly believe Kestrel is a high-quality and attractive acquisition that will deliver on Yancoal's value-adding growth aspirations and positions the business to deliver strong performance and shareholder returns in the future. We look forward to working closely with the current owners, EMR and Adaro through the coming months to reach transaction completion.

Kestrel is a well-run, high-quality mine with a strong team. We also look forward to welcoming the Kestrel team to Yancoal and working collaboratively with them, our new joint venture partner, Mitsui, as well as local stakeholders and communities. We see this acquisition as another great step forward for the business.

The release of our first quarter production report is set for the 20th of April. We'll have another opportunity to speak to you next week during the webcast for that report on the 21st.

Thank you, and have a great day.

Thanks, everyone, for participating. Desmond, could you please conclude the call?

Thank you. That concludes today's conference call. Thank you all for participating. You may now disconnect your lines.

Good day, and thank you for standing by. Welcome to Yancoal 2025 Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Brendan Fitzpatrick, Investor Relations merger. Please go ahead.

Thank you, Maggie, and thank you to everyone for joining us on this briefing for Yancoal's 2025 financial results. My name is Brendan Fitzpatrick, the Investor Relations Manager. To present to that briefing, we have the following members from Yancoal's executive leadership team. Sharif Burra, Chief Executive Officer; Kevin Su, Chief Financial Officer; Laura Zhang, Company Secretary, Chief Legal, Compliance, Corporate Affairs Officer; Frank Fulham, Chief Sustainability, Technology, Innovation and Development Officer; David Bennett, EGM Operations, Mark Salem, EGM, Marketing and Logistics; Mike Wells, EGM Finance, Marc Jacobs, EGM, environment and external affairs and Sebastian de Koning, EGM, Audit and Risk.

After the executive team completes the review, we will move to a question-and-answer session. The commentary provided today is based on the 2025 financial results and associated announcements published to the Australian Securities Exchange and the stock exchange of Hong Kong yesterday to the 25th of February. Slides 2 and 3 contain notices and disclaimers relevant to today's presentation and the forward-looking statements it contains. Please make yourself familiar with the content of these 2 slides.

Throughout the presentation, we will use Australian dollars unless otherwise stated. Sharif Burra will provide the introductory remarks for the Yancoal's 2025 results. Sharif, got to hand over to you. Thank you.

Thank you, Brendan, and welcome to everyone on the call. During 2025, we delivered a great operational performance. ROM coal production was 67 million tonnes and our attributable saleable coal production was 38.6 million tonnes. This was [indiscernible] record for Yancoal and in the upper quartile of our production guidance. Our cash operating costs were $92 per tonne, a reduction of $1 per tonne from the first half. The 2025 costs were also $1 per tonne lower than our 2024 costs. Lowering our cost was a great outcome in the current industry setting, and I applaud all the people working at our mines for the operational performance they've delivered.

Our overall realized price for the year was $146 per tonne, given an implied cash operating margin of $39 per tonne after government royalties.

We achieved revenue of almost $6 billion and an operating EBITDA of over $1.4 billion at a 24% margin. As we've noted previously, Delivering this margin during a period of weak coal prices is a testament to the quality of our assets and our ability to operate them effectively. Our profit after tax was $440 million or $0.33 per share.

In accordance with our dividend policy, the Board has elected to distribute $161 million to shareholders at a $0.122 per share fully franked final dividend. Together with the $0.062 per share interim dividend, the total 2025 dividend represents a 55% of net profit after tax payout ratio.

Company retains a strong balance sheet with $2.1 billion of cash and no external debt at the 31st of December.

Slide 5 shows our safety performance, keeping our workforce safe is always our first priority. The TRIFR statistics improved over the year and remains below the industry average, but we aim to reduce it further. Safe mines are productive bonds. Our push towards a strong operational outcome this year is underpinned by our commitment to improving safety performance through targeted intervention activities.

As part of the 2025 financial results, we've also published our AASB S2 climate-related disclosures. Preparation of the disclosures included identification and assessment of climate-related risks and opportunities. We intend to develop a climate transition plan in 2026 to strengthen our climate resilience and support the Yancoal P4 sustainability strategy. Initiatives already underway include the sustainability digital data platform, which was launched in Q3 of 2025. This will improve the capture, quality and governance of sustainability data and reporting. Our P4 report provides an annual update on sustainability activities, including progress in delivering the company's P4 sustainability strategy. The 2025 P4 report will be published in April 2026.

I'll now hand over to David Bennett to take you through our operational performance.

Thank you, Sharif. Slide 7 summarizes the operational drivers behind our full year performance. As Sharif mentioned, we delivered record performance in the top end of our production guidance. second half improvement in cash operating costs took us just below the midpoint of the guidance range for the year. ROM coal and saleable coal production figures were 5% to 7% higher than 2024. Attributable sales were up 1% after we optimized our sales volumes and stock position. Our lower realized prices reflect conditions in the international coal markets. Mark Salem will provide more detailed comment on our sales in the coal market shortly.

Turning to Slide 8. We see that ROM coal on a 100% basis was 67 million tonnes. This was up 7% from 2024 and was the best performance in the past 5 years. All of our operations other than Ashton increase ROM production compared to 2024. This was a notable achievement as we encountered above-average rainfall at our New South Wales mines, but our past investment in water storage capacity meant less disruption to production.

Attributable saleable coal production was up 5% compared to 2024. We have consistently delivered toward the upper end of our asset and equipment capabilities throughout the year. The quarterly production profile was much more consistent in 2025, which allowed us to pursue optimization and efficiency gains. The aim is for a similar approach in 2026. That said, the first quarter is likely to have the lowest production figure, so we will look to increase production in the subsequent quarters.

During the year, we set 2 separate well records with our R9800 excavators. At Moolarben, we set a world record for total material movement in 2025 and with 17.6 million BCMs of material movement. And at MTW, a second excavator set a world record for total material movement in a month of 1.75 million BCMs. These performances demonstrate Yancoal's capability to operate at the highest industry levels. R9800 excavators are also in use at HVO and sharing the knowledge and best practices between mines improved performance across all of our operations.

Slide 11 shows our cash operating costs as Sharif said, our cash operating costs were $92 per tonne in 2025. We continue to work extremely hard to keep our costs in check to offset the impacts of wet weather delays and inflationary pressures. This operating cost is not just an improvement over last year. It is the best performance in the last 4 years. Increased production, mine plan optimization as well as equipment reliability and utilization all contributed to combust inflation elements and the impacts of higher demurrage throughout the year. We see our ability in keeping costs flat over the past few years as a great outcome relative to the sector, and this leads to the next slide.

Turning to Slide 12, we demonstrate why keeping cash operating costs low is crucial. Our implied operating cash margin in 2025 was $39 per tonne. This chart shows the expansion and contraction of margins we have experienced over the past 5 years. The margin, while lower than in recent years remains positive. Combined with our scale of production, this drives the financial performance, which Mike Wells will cover shortly.

Slide 13 has data we have used in the past. The chart displays our 3 largest mines in the context of other Australian thermal coal mines. The total cash costs are shown on an energy adjusted basis to counter the influence of coal quality on the operating margin.

We updated the slide to show the same data set 12 months apart, with December 2025 compared against December 2024. We can see the collective move by the industry to occurred costs. The key takeaway remains the large-scale, low-cost mines such as ours remain viable when many other mines struggle through coal price cycles. This is why we focus on maintaining our assets and operating them as well as we do.

I'll now hand over to Mark Salem to cover the coal markets.

Thanks, David. Starting with product mix on Slide 14. 84% of our sales were thermal coal with the balance being lower grade metallurgical coal. This product split varies from period to period, depending on which coal seams are in production at each mine and how we can maximize the market opportunities.

You may recall -- back on Slide 7, we had 38.6 million tonnes of attributable production but only 38.1 million tonnes of attributable sales, a variance of 0.5 million tonnes. This was a result of weather-related issues causing some delays to vessel arrivals and cargo assembly resulting in some sales into January.

In addition, if you look back at 2024, we had 800,000 tonnes more sales than production, optimizing our sales at a time when the market was in backwardation and therefore, reducing our stocks. The ability to rebuild stock will allow ongoing optimization of our 2026 position.

Turning to Slide 15. We show our market split in contrast two, both sales, revenue and sales volume for 2025 against 2024. We optimize the revenue contribution of our various coal products to specific markets. China is a significant offtake partner both on a volume and revenue basis. Customers in China tend to take a higher proportion of our API5 5,500 net as received calorific value quality coal. However, revenue and volumes decreased in 2025 as China utilize more domestic supply.

Our Japanese customers purchased a significant portion of our higher calorific thermal coal, our lower volatile PCI and semi-soft coking coals. This market, therefore, is very important to revenue contribution. Revenue to Japan increased mostly due to an increased proportion of our metallurgical coal sales.

In Australian dollar terms, our overall realized coal price was $146 per tonne for the year, down 17% from 2024. Strong supply and benign demand conditions persisted in the international thermal coal markets through most of 2025. Geopolitical events, port disruptions at Newcastle, economic initiatives in China and seasonal trading patterns all contributed to short-term price movements during the year, none of which having effect on any long-term structural trends. Cuts to supply from Indonesia less 10%; and Colombia, less 18% were constructive, but there were also lower imports by China, down 18% and Taiwan down 12%.

We price our thermal coal against the API5 and GlobalCOAL Newcastle indices. Our realized price in U.S. dollar terms sit between these indices as shown in the chart. In Australian dollar terms, our realized thermal coal price was $136 per tonne down 15% from 2024.

Australian metallurgical coal exports fell 9% in 2025 due to the mine and port disruptions and weather impacts. This contributed to a 7% decrease in global metallurgical coal exports. However, demand for metallurgical coal lackluster as steel exports from China displace production from other countries. Metallurgical coal indices that Yancoal sells against finished at similar levels to the start of the year.

In Australian dollar terms, our realized met coal price was $203 per tonne for the year, down 2026 from 2024 -- 26% in 2024.

There are various groups providing forecast for international thermal coal markets. A common theme we see in recent forecast is the ongoing revision of when coal demand will peak and at what level. Delays to projected closure dates for existing coal-fired power generation combined with new facilities coming online, drive the evolving demand profile. Since we last included this slide, the second half of 2025 forecast revisions have lifted the profile once again.

On Slide 19, we look at projections for seaborne supply over the next 10 years. Approval and financing challenges, the new mines natural reserve depletion in the coming years. There is a growing appreciation that coals still has a meaningful role in global energy mix, and there is the potential for a supply shortfall in coming years.

Since we last provided this profile, the projection to supply beyond 2030 has been bolstered by whether it will satisfy demand is still debatable.

In the seaborne metallurgical coal market, demand for mature regions like Europe and Northern nation are likely to decline over the next 15 years. However, this could be outpaced by the growing demand from emerging economies, leading to an increase in total demand. In the seaborne metallurgical coal market, some supply growth is required over the next 15 years to meet that. Unless the additional supply entering the market has a total cash profile lower than existing supply, which seems unlikely. This situation likely necessitates higher met coal prices in the forward years.

I will now hand over to Mike Wells to cover our financial performance.

Thank you, Mark. Starting with the key numbers on Slide 22. Whilst we delivered record production, the lower average realized coal price drove a 13% decrease in our full year revenue to $5.95 billion. This price impact naturally flows down to our operating EBITDA of $1.44 billion. Similarly, looking at the cash flow statement, the 44% reduction in operating cash inflows reflects the 44% decrease in operating EBITDA. $769 million was distributed to shareholders during the year, and capital spend was $750 million. Overall, we retained a strong financial position with $2.1 billion of cash at 31 December and minimal lease liabilities.

The 2 charts on Slide 23 demonstrate the close correlation between average realized price, revenue, operating EBITDA and the operating EBITDA margin. We extended these charts back to 2018 to show the impacts of the cyclical coal price.

Looking at Slide 24. The profit after tax and operating cash flow profiles tend to replicate the revenue and operating EBITDA profiles but can also be subject to accounting adjustments, one-off items or timing differences. 2023 was one such example where a one-off tax payment was made related to our 2022 earnings as the company moved into a taxpaying position.

I will now hand over to Kevin Su to cover the financial position and dividends.

Thank you, Mike. Looking at Slide 25. I'd like to remind people that in the 3 years to early 2023, we required loans of more than USD 3 billion. This debt repayment transformed the capital structure of the company. As a result of the debt reduction, our financial position is far more secure than it was the last time we faced a cyclical low in coal prices just 6 years ago in 2020.

Turning to Slide 26. We look at how well Yancoal has rewarded its shareholders during the past 7 years. We have a strong financial position as noted at the start of the call. The directors have allocated $161 million to pay a fully franked final dividend of $0.122 per share. Together with $82 million allocated to the interim dividend, the total 2025 dividend is $243 million or just over $0.80 per share. This total dividend represents 55% of reported profit after tax for 2025.

Including the 2025 financial dividends, the company will have distributed $2.5 billion of unfranked and $2.8 billion of franked dividends since 2018, a total of over $5.3 billion or around $4 per share.

Slide 27 has our operational guidance for 2026, we're looking to carry forward our operational momentum, the increased attributable saleable production guidance range is 36.5 million to 40.5 million tonnes.

Our guidance range for cash operating cost per tonne is $90 to $98 per tonne as we allow for some cost inflation. Our capital expenditure guidance is $750 million to $900 million. As we have stated in the past, continued reinvestment is required to ensure our large scale lines willing productive, low-cost margins. We continue to balance production volumes, product quality, efficiency metrics, cash operating costs and the capital expenditure to deliver the best possible outcome for shareholders. This year was no different and our executive team and people at the site are focused on delivering again in 2026.

I'll now hand back to Brendan to coordinate the Q&A session.

Thank you, Kevin, Sharif, David, Mark and Mike. As usual, we have included appendices and additional information for reference at the end of the presentation pack. We will now take questions from the phone lines and written questions submitted via the webcast. Let's start with questions from the phones. Maggie, could you please start the process for questions on the phone line?

[Operator Instructions] First question comes from Wayne Fung from CMBI.

This is Wayne Fung with CMBI. So my first question is about the output. So how would you expect the production cadence this year? Would that be more front-end or back-end load?

And my second question is on the cost side. So we're likely to see an inflationary environment given the raw material cost hike, so -- which could possibly hit both OpEx and CapEx and any measures to Easter pressure? And my final question is on pricing. How would you expect coal price in Q4 and implementation of the production cut policy in Indonesia?

Thank you, Wayne. I appreciate a couple of good topics to touch on at the start of the call. For the production profile, I know we've had a differentiated performance across quarters in the past. Sharif, could you provide some comments on the production profile for 2026?

Yes. Thanks, Brendan. Look, our intention is to carry the strong momentum from 2025 into 2026. We have had a good start to 2026 with regards to weather in the Hunter Valley. And we intend on maintaining some of the record productivity levels particularly out of our cut first moving fleet. David, with regards to cadence, you might like to add any further comments throughout the year?

Yes. Thanks, Sharif. Just to the production, as we talked about in the update a while ago, we expect quarter 1 to be a little lower on the coal production side and then more of an even flow of coal throughout quarters 2, 3 and 4. However, on the other side, in our open cut mines in quarter 1, we need to move a lot of overburden and unlock the coal so that it's there for -- to produce and sell that product down the supplier line. So expect a lower slightly lower quarter 1 for coal production but an increase in overburden volumes in quarter 1 at the same time.

Thanks, David, Sharif. The second part of the question from Wayne was cost inflation and the impact on both OpEx and CapEx. There may well be a connection back there to the production profile and the unit costs. But what can we say about the inflation effects and I note that we did allow for a slight cost inflation where we set our unit cost guidance this year?

Yes. Thanks, Brendan. It's Mike. Maybe if I take that. Yes, as you stated, we have increased the guidance range by $1 at the end lower end this year to reflect the fact that we are expecting some cost inflationary pressures to come through. As we've demonstrated in the last 4 years, we have been successfully being able to offset inflationary increases through both production increases and productivity initiatives. So we will continue to target those in 2026, but there are inevitably some inflationary cost headwinds that will are likely to flow into our results for the year.

And I think Mike, those comments extend through the capital as well.

Thanks, Mike, Sharif. And then the final part of the question was coal price markets. Coal price, the outlook for markets and the potential impact for reported actions in Indonesia, perhaps Mark Salem can return to you for a comment on the coal markets.

Sure, sure. Look, prior to Chinese New Year and a couple of weeks prior to Chinese New Year, the Indonesians made some several different comments about production cuts or allocation of domestic production to domestic utilization. And we did see the market react. The market is very reactive to comments like that. And we under normal circumstances, we would see a substantial cut of Indonesian exports in the marketplace. And so the market did react. But none of those comments or rumors have been verified yet or have been made policy within Indonesia. They were made by different ministers. And we haven't seen any concrete movements except for the movement of preserving an increase of 5% going from 25% to 30% of production for domestic use. So we did see the market react but since then and during Chinese New Year, when things are relatively quiet in the market, we have seen the market soften a little bit. And so we really just need to wait and see whether any of those policies come through officially as well as whether we will see a reaction from the Chinese market which we understand still has very high stocks at the moment.

So moving forward, I think we're still expecting the market to be relatively flat. We saw the GCNewc come back down to around $114 this morning and the API5 is still sitting around that $84 price. So everything is coming back to normal levels that they were prior to the announcements.

Thanks, Mark. Wayne, have we satisfied your questions?

I have no further questions.

Next, we have Peter Wang from CICC.

So I have three questions. On the foreign exchange loss, which was primarily driven by holding U.S. dollar as the Australian dollar appreciated. How do you see this FX effect and the potential for similar losses going forward?

And also just a follow-up questions on production costs and CapEx. So of the increase in cost guidance, how much would you attribute to the inflation versus some other factors? And the CapEx, are we supposed to expect sustaining CapEx to remain around the similar levels in the future years? That's all my questions.

Thanks, Peter. Let's start with the first question, the FX loss on the U.S. dollar holding. I'll turn to Kevin first for an initial comment.

Thanks, Peter. As you know, Austrian dollar is a very volatile currency. It's moved up and down quite sharply. And then the rapid appreciation of Aussie dollar rates is in 2025. And also in 2026 in the past 2 months, what we have observed the Audi dollar appreciated pretty sharply. As a result, the -- we will see the U.S. dollar working capital, unfortunately, suffer the foreign change loss.

As of today, what we can see the expectation of Aussie dollar and U.S. dollar with the 2 Central Bank policies completely different. As a result, we potentially see A rated Austrian dollar rate for 2026. But once again, I want to just remind the investors the nature of Australian dollars is very volatile. We have seen...

[Technical Difficulty]

Just a moment for next question. Next question comes from Paul Young from Goldman Sachs.

First question is on the 6,000 kilo cal market. We're at sort of peak demand, I guess, in Northern Hemisphere at the moment in the traditional markets. So just on wondering if you can add any comment around inventory levels across Japan, Korea, Taiwan and any forward look on just how demand is at the moment and demand into 2Q?

Paul, sorry, could you please repeat the question?

Yes, I can. Sorry. Can hear me now?

Just a moment please.

And we'll start to roll off in the coming years, given we have been going through a substantial fleet replacement cycle.

Just checking with the moderator that we've still got audio connected. Maggie, can you...

Brendan, yes.

Hi, Paul, sorry about that. Could you please repeat your question, Paul?

Yes. The first question is just on the thermal market. I know you just covered off the uncertainties around Indonesian export quotas, et cetera. But just I'm curious around your thoughts on the 6,000 kilo cal market at the moment. We're at sort of peak demand in northern hemisphere in theory at the moment. But any color you can provide on what demand you're seeing into 2Q for 6,000 kilo call higher quality coal into traditional at such as Japan, Korea and Taiwan.

Okay Mark, it sounds like a question for you. What are we looking at in the North Asian market and the GCNewc-style product?

Yes, sure. Thanks, Brendan. Thanks, Paul. Look, I can honestly say, Paul, that the market for 6,000 product is very stable. And we're seeing very, very solid consistent demand. I think it's safe to say that in some of North Asia, there has been a shift in the way they think about coal. And we've definitely had a lot of interest in Japan, in particular, on security of supply of the premium quality material. And that's both government level as well as customer level. So there's definitely the shift to a very good stability for 6,000 product.

Okay. And then another question on your production guidance for 2026. 2025, you did really well from a perspective of where you finished versus the guidance at the beginning of the year. Just on your guidance is broad flat year-on-year saleable coal production. Are there any movements mine by mine that is worth calling out between the open cuts and undergrounds Queensland versus New South Wales and where production might be slightly higher or lower between the operations.

Thanks, Paul. We did know that there would be a slightly lower production in the first quarter, hopefully more steady production through the year. I'll turn to David, Bennett perhaps we could touch on elements such as the longwall movement schedules across some of the underground mines. I know, David, you touched on the overburden and some of the priorities that we had to have through the production schedule this year. But what can we say in addition to what we've already said with regards to the production profile and the mine by mine or state by state at fleets?

Yes. Thanks. Thanks, Brendan, and thanks, Paul, for your question. Look, our big mines in New South Wales, our big open cut operations are fairly consistent with what we're expecting from them in 2026 versus 2025. There's some very small ups and downs between MTW and HVO. Moolarben open cut is basically producing exactly the same profile is what it did in 2025. In our underground operations, we're expecting extra production this year from Ashton Mine. Last year, we had a big relocation from 1 mining domain into a new mining domain and the longwall is in them and producing. So this year, we're expecting quite a step-up in production from Ashton.

Moolarben Underground is doing a little less this year whilst it remains in the same mining domain it's got an extra longwall move that will take the nominal sort of 35 days or thereabouts to do that move. So there'll be a little less production from Moolarben open cut, but more than offset by the extra at Ashton. So overall, from a New South Wales perspective, that the volumes are very, very similar. and likewise in Queensland, similar volumes there as well. But overall, when you put it all together, we'll do slightly more coal as per our guidance in 2026 compared to what we did.

Yes. That's very helpful. And then last question for me is, the balance sheet is strong and has been for a little while. You've got number of underground projects, you're very good at developing underground. I know you've got the MTW underground approval in the works at the moment. There's a number of opportunities, I think, coming up in the market from a M&A perspective? And you've outlined a pretty positive outlook for metallurgical coal over the medium to long run in your presentation. So I'm just curious about where, again, maybe I know you've spoken about this in past where M&A fits as far as and how active are you looking at the moment for opportunities?

Yes. So often one of the questions that comes up. I appreciate that one, Paul. Sharif, I turn to you for some initial thoughts on how we're thinking about the balance sheet internal opportunities and the broader context of capital management?

Yes. Thanks, Paul. Look, we do have a very strong financial position. But noting, we've also followed our dividend framework and we have readily returned cash to shareholders. You'd appreciate international coal prices are improving. However, as we've mentioned, the strengthening Aussie dollar does adversely affect our revenue.

In this setting, we are continuing to evaluate opportunities to improve shareholder value, and we will utilize our financial position once suitable opportunities are identified. We are aware of media speculation, but we don't comment on specific scenarios. What I would say is our strong financial position does enable us to explore opportunities that may arise, and we are continually evaluating any opportunities in context of current market conditions.

I guess it's worth noting that it is a continual process to value add opportunities. And we make that evaluation in the context of market conditions, as you've noted.

Thanks, Paul.

Yes, Brendan, I'm back to you for webcast questions.

Thank you. I'll move on to the webcast questions. I can see several coming through. Some of them are touching on topics which we've already worked through with the phone questions. I'll amalgamate or combine some of the questions to try and make the process efficient for all of us.

Starting with a query about the reported profit. One of the people who have made the observation that 2024 was a stronger year. 2025 net profit of $440 million. Should that be considered more of a mid-cycle earnings base, asking if we see downside risk to coal prices softening further. And also asking at the current realized price, what would we describe as a breakeven cash flow.

There are a few elements in there, which we wouldn't necessarily specifically comment on. But I think through the slides, we certainly demonstrated how the coal price links through to revenue, operating EBITDA and EBITDA margins. And with the cost profile we've established, I think there's a reasonable capacity to sort of work backwards in terms of where we might get to some sort of breakeven price. But the coal price assumptions very much dependent upon the individual to form a view.

The next question was CapEx. We came in at $750 million at the lower end of the guidance. We did touch on this earlier, Mike, the split between sustaining and growth related, but would just reiterate the what we see as the true underlying sustaining and what's the longer run reinvestment into the assets.

Yes. Thanks, Brendan. So also just to note in the $751 million, there's some $130 million of capitalized development with respect to our underground mines, which is the development done in advance of longwall extraction, which is included in that disclosed in the financials. Of the balance, I mean, more than 3/4 of that, certainly the majority is in relation to sustaining capital. That's sort of the level that we incurred in 2025, and that would be sort of similar going forward in the current year?

Thanks, Mark. There's a few questions related to dividend franking balances and policy. Perhaps, Kevin, we could test your thinking on these topics. There's a noted observation that franking credit balance is in excess of $2 billion, conceptually could sustain a fully franked dividend up over $4 billion and there's also a general question coming through from CICC about the dividend policy. Could you give us some reiteration of the company's dividend framework and how the capital management considers dividends in that context?

Yes. Thanks, Brendan. From the company perspective, we try to maintain a consistent distribution to our shareholders. And following the policy, which is 50% NPAT or 50% free cash flow, whichever is higher, that's exactly the dividend payout we'll follow this time. As a result, you can see a 55% payout ratio for the final dividend in 2025.

It's a very good question about franking balance of $2 billion is a very decent balance, which definitely enable us as Yancoal can just keep paying fully from the dividend in a very, very long period. But as a result, we will link this franking credit to the ongoing dividend payment instead of using the franking credit as a special EBITDA payment.

Thanks, Kevin. The benefit of a real-time webcast and market data is we can see the share price reaction. We have a question coming through that makes the observation that the share price is down about 10% today since market opened and asking for a thought process on how we observe the equity market reaction and how we link that back to the priorities of dividends and other opportunities that the company might be considering in the short, medium and longer terms. Sharif to start and then perhaps Kevin to follow up.

Yes. Thanks, Brendan. I think if you look at the fundamentals, Yancoal had an exceptionally good year last year. We operated more safely, more productively and the discipline in our operations is certainly there. Yancoal is in a very fortunate position of being a very good coal miner with some very strong assets and that certainly lays the foundations for Yancoal to explore certainly other opportunities.

On share price, I think quite importantly, it's about how we look at the yield and how we look at the share price and how we plan from capital management side to set the right discipline internally for the company to grow.

From company perspective, we have to balance the growth dividends and then potentially debt management, which fortunately enough, Yancoal have fully repaid all the loans 3 years ago. And not be turning the growth on the dividend. Yes, normally a company we do not achieve 30% cash. I think that's a really good observation. But as a company, as Sharif just mentioned, we just need to have the right mentality to look at different opportunities. However, we are not in a position to give any comments to such opportunities, but we do want to have flexibility to pursue value accretive opportunity, which we believe is in the long-term interest of shareholders.

And then we feel very strictly following the policy as I just mentioned previously, which is 55% payout ratio. We feel is a fair payout ratio for the year. Thanks.

Thanks, Kevin. I see Peter from CICC's being able to rejoin the call. Maggie, could we come back to you and find out what people was able to hear or not hear when you asked questions earlier?

Yes, no problem. Just a moment for Peter? Next we have -- please go ahead, Peter.

I'm sorry, my connection just dropped when you talk about the cost guidance changes. I just want to confirm what portion of the upward revision in the cost guidance would you attribute to the inflationary pressures compared to others?

Yes. Thanks, Peter. We covered it whilst your line was out, but perhaps just to take the opportunity and Mike could recover the that inflationary element within the unit cost guidance.

Yes. Thanks, Peter. So essentially, our 2 major costs within our operating costs related to labor costs and maintenance costs. And both of those would be expected to face inflationary headwinds in the current year with our labor costs underpinned by enterprise agreements covering the majority of our site employees. And similarly, we'd expect some increases in maintenance costs being passed on by the OEMs during the year as well. After that you get more in the commodity type pricing area of these and electricity exposures and things like that, where the position and how that will play out in the year is less certain. So safe to say there's certainly some inflationary costs will be embedded in our cost profile in 2026. And as we touched on before, the expectation is that we'll be able to offset, to some degree, some of that through further increases in production volumes as well as further productivity initiatives. So hopefully, that gives you a bit more flavor around how we see the cost in the current year.

I see no further questions at this time. Brent, back to you.

Thanks, Maggie. There's a follow-up question on the dividend policy topic. One of our participants asking if there's the potential to refine the dividend policy potentially catering to noncash items or impairments and hence, adjusting payout ratio parameters. Kevin, could you give us some thoughts on that topic?

Sure. This is a very good question. I think one thing we should have elaborated in more is what I just mentioned, 50% NPI or 50% freight is all rate of normal items, which means all the noncash item of normal items will be excluded as a result. That's the reason why you can see a 55% payout ratio instead of strictly 50% payout ratio. And that's caused by the NPAT adjusted NPAT number is better than the adjusted free cash flow number. But I think that's a very good question. It's a good opportunity to clarify that. Yes.

And perhaps also worth clarifying that the policy is not rigid. The Board has discretion within the allocation parameters.

One of the questions coming through relates to reserve depletion and how does management think about reserve depletion and what should investors look at in terms of lead indicators for managing the coal reserves. I know that we've just published our reserves and resources statement alongside the financial results. There was some mining depletion as would be expected on an operating basis. But beyond that is a fairly steady state reserve and resource basis with some specific adjustments for recalibration of geology. A broad comment on how we think about the long-term reserve profile.

Yes. Thanks, Brendan. Obviously, previously in the call, [indiscernible] underground project. We're progressing through the study stays. And the intent is subject to those studies is to bring another underground mine online over time. Also, we regularly look at all of our assets and through our life of mine planning process seek to optimize and further extend or take advantage of the assets in and around what we have. And the other are that is obviously the nonorganic opportunities that may present themselves over time.

Thanks, Sharif. A question coming through related to our coal sales. Somebody is interested in if we have fixed price contracts with customers for this calendar year, what percentage is fixed or variable pricing? And is that anything that's changed from 2025 in terms of the contract status. So Mark, what can we say without giving away our commercial position?

Yes, sure. Understand, Brendan. Look, in terms of our price strategy, we always apply a risk mitigation strategy, and we also ascertain the market movement we know Mark prices declined in 2025. And we did see some recovery in so far in January, February and towards the end of 2025. And so we're always modifying our pricing strategy to reflect that in terms of what portion of sales that we do on a fixed basis versus a variable basis or based on the indices. And we apply a lot of rigor in terms of that strategy as well.

Thanks, Mark. I recollect that last year, we had a slightly higher than normal volume committed through the calendar year, which left us somewhat protected or less vulnerable to volatility in prices. Is that a similar approach to this calendar year? Can we say anything about that?

It is a similar approach. We are definitely focused on maintaining and capturing market share. from a volume point of view. So in terms of our volume position, we're very well contracted going into 2026. And a lot of that is based on index profile.

Thanks, Mark. There's a follow-up question from Unis at Millennium. wanting to check on that comment about the FX exchange losses, looking for some clarification on how we manage our costs and handle FX risks. So Kevin, perhaps I could turn to you for a comment on FX exposure and how we think about it and manage it.

Sure. If I understand the question correctly, is about the foreign change impact on the cost side. Largely, the cost is in Aussie dollars. As what Mike just mentioned, the biggest portion is labor cost and also our maintenance cost. We do have some small portion U.S. dollar-linked cost exposure, which is something we can share with the investors. Yen cost revenue largely driven by the U.S. dollar-linked indices. So as a result, we can always keep some U.S. dollar currency to reserve them and pay out of pocket for the U.S. dollar expenses. So it's a natural hedge itself.

Okay. And perhaps, Kevin, a question that might have some relation to that topic. It looks like the question is asking about the $2.1 billion we have in cash, and it seems to be asking about what sort of returns we get on the cash that we hold on the balance sheet?

Yes. If we look at the sizable cash deposits, we have been very diligently to put them into term deposits to maximize return. A high level indicative return is about 4%, plus minus Yes.

Thanks, Kevin. We're just coming towards the end of the hour that we've allocated. I see one final question. We'll take this one. It does link back to some of the discussion we've already had, but perhaps it's an appropriate place to close out the call. Share price seems to be indicating that the dividend has disappointed investors. The question is, in our opinion, does this mean investors need to change the thought process towards Yancoal and the way the company approaches dividends or conversely has Yancoal and the markets diverge in terms of the current expectations in the short term and what value or how do we see value being generated going forward. So Kevin, could you give us your thoughts once more on how we prioritize dividends, capital management and that longer-term growth thought process?

Sure. It's a very good question. in a way, we fully respect the concern from the investor and spending higher dividend return which is very understandable. And then from a management perspective, many executives holding Yancoal shares as well. So we fully appreciate the sentiment.

But I think back to the position we shared earlier, first of all, the dividend is a part of profit. So to have very high dividend, we do need a good profit to support the dividend, and that's the point we made earlier, 55% payout ratio managing all the capital -- CapEx and uncertain market, we feel 55% payout ratio is a reasonable fare ratio. But at the same time, we also want to make this clear. We do hold a very substantial amount of cash. And then this is the following Yancoal's capital management discipline, which we have to balance between value-accretive growth opportunities with rewarding our shareholders, and we as a management team and from both perspectives, try to do our best to maintain such a balance. We fully appreciate your understanding. Thank you.

Thanks, Kevin. We're at the end of the allocated, Sharif. Could I hand over to you to provide the closing remarks?

Thank you, Brendan. 2025 was truly a year of great operational performance for Yancoal. We set well records at 2 mines and delivered record coal production. These achievements demonstrate our leading technical and operational capabilities. I believe we have some of the best assets in the industry and that our scale and competitive cash costs drive our performance. The guidance Kevin provided shows we're looking for further gains from our assets.

We have a strong net cash position and continued access to debt markets. This provides considerable financial flexibility. We continue to reward our shareholders with fully franked dividends. We remain focused on what has made Yancoal the second-largest coal producer in Australia. That's maximizing production keeping costs under control and a balanced allocation of capital.

We look forward to giving you our next update on the 21st of April after we released our first quarter production report. Thank you to everyone who joined us on the call. Have a great day.

Thank you, Sharif. Maggie, could you conclude the call, please?

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to Yancoal Fourth Quarter 2025 Production Report. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your first speaker today, Brendan Fitzpatrick, Investor Relations Manager. Please go ahead.

Thank you, Maggie, and thank you to everyone on the call for joining this briefing on Yancoal's Fourth Quarter Production Report for 2025. 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 Sharif Burra, Chief Executive Officer; Kevin Su, Chief Financial Officer; Laura Zhang, Company Secretary, Chief Legal, Compliance, Corporate and Affairs Officer; Frank Fulham, Chief Sustainability, Technology, Innovation and Development Officer; David Bennett, EGM Operations; Mark Salem, EGM, Marketing and Logistics; Mike Wells, EGM Finance; and Mark Jacobs, EGM, Environment and External Affairs.

The commentary provided today is based on the quarterly production report published to the Australian Securities Exchange and the Stock Exchange of Hong Kong platforms on the 19th of January. There is no presentation pack for this conference call. The Yancoal website holds past presentations for any participants who require additional information on the company.

I'll hand over to our CEO, Sharif Burra, to provide the fourth quarter highlights.

Thanks, Brendan. I also welcome everyone joining us on today's conference call. We had a great quarter. In fact, the 10.4 million tonnes of attributable saleable coal was a company record. The fourth quarter production carried us to the top of our annual production guidance range and the 38.6 million tonnes for 2025 was also a company record. This was a tremendous effort, and I congratulate all of our people for their role in this achievement. All of our mines contributed to total ROM coal production, which increased 20% compared to the third quarter.

As usual, we don't include cash operating cost per tonne in the quarterly report. At the half year, our cash operating costs were AUD 93 per tonne, in the middle of our AUD 89 to AUD 97 per tonne guidance range. Consistent with our commentary in October, for the full year, we expect to deliver unit costs around the middle of the guidance range. Previously, we disclosed our expectation for capital expenditure within the guidance range. We now anticipate it will be towards the bottom end of the $750 million to $900 million guidance range.

During the fourth quarter of 2025, international coal indices for both the thermal and metallurgical coal markets had mixed performances, yet our average realized prices improved by 6% to AUD 148 per tonne from the prior quarter. This realized price, combined with 10.8 million tonnes of attributable sales and our disciplined approach to costs delivered a $307 million increase to our cash balance over the quarter.

We now have over $2 billion on the balance sheet and no debt. This gives us scope to consider dividends and to contemplate potential value-adding growth opportunities. We look forward to carrying our positive operational momentum into 2026. We will provide our 2026 guidance on production, cash operating costs and capital expenditure in our 2025 financial results, which are scheduled to be released on the 25th of February.

I'll now hand over to other members of our executive team to share further details from the fourth quarter, starting with David Bennett, our Executive General Manager of Operations.

Thanks, Sharif. Our total recordable injury frequency rate reduced throughout 2025, and it was 6.14 at the end of the year. We achieved a downward trend in this statistic and our rate is below the industry weighted average of 7.45. We remain committed to further improving our safety performance.

During the quarter, we produced 18.9 million tonnes of ROM coal, 20% more than the third quarter. From our ROM coal, we produced 13.6 million tonnes of saleable coal, 11% more than the third quarter. It takes all our people across all our mines working cohesively to deliver this level of performance. There were some temporary challenges such as hard coal encountered by the Moolarben longwall, some wet weather delays and some equipment reliability issues. However, in each case, the issues were resolved or effective adaptions were applied.

Our attributable share of the saleable coal was 10.4 million tonnes. As Sharif mentioned, this was a record performance. In the report, we explained how the 10.4 million tonnes includes the additional 3.75% interest in the Moolarben joint venture, which we secured on the 3rd of October. If this additional interest is excluded, the figure would have been 10.2 million tonnes, which still would have equaled our best ever historical quarter.

I will now hand over to Brendan Fitzpatrick, Investor Relations Manager, to provide commentary on the coal markets.

Thanks, David. This is Brendan. We do have Mark Salem, our EGM, Marketing and Logistics online for the Q&A. However, I'll present the initial comments on his behalf regarding the coal market.

Our attributable sales volume of 10.8 million tonnes was similar to the third quarter and followed our strategy of optimizing sales volumes and managing stock positions. The sales volume contained a typical mix of thermal and metallurgical coal products. During the quarter, conditions in the international coal markets, both thermal and metallurgical remained somewhat challenging. There were mixed performances across the indices we sell against.

The average price on the API5 Index was 12% higher than in the third quarter, while the average price on the GC Newcastle Index was flat. That said, it was the GC Newcastle Index that finished the quarter with positive momentum. There was a similar situation for our metallurgical coal products. The average price on the Platts Low Vol PCI Index was down 2%, but the average price on the Platts Semi-Soft Index was up 10%.

In the thermal coal market, Japan is still utilizing coal as a fuel of choice for power generation and its imports increased 16% in 2005. South Korea also increased its imports but prioritized Indonesian and Colombian supply over Australian coal. Elsewhere, demand for thermal coal was less resilient. Despite a restock cycle in China during the fourth quarter, its annual imports fell 18% through the year due to a strong domestic production level in the first half. Taiwan utilized more gas and imported 12% less coal than last year, and India reduced demand for coal imports due to cool weather through summer and increased hydropower generation.

Supply from Australia was constrained at times during 2025, but as our performance shows, there is still good export rates being achieved. Indonesia's exports fell 10% and Colombia's exports fell 18% in response to market conditions and due to some infrastructure challenges. But Russian exports continue to reach international markets, and improved rail and port operations in South Africa enabled its production -- sorry, its exports to increase by 5%.

A demand uplift may be needed for thermal coal indices to break upward from the trading ranges observed over the past 6 to 12 months. Global demand for metallurgical coal declined as steel production decreased in many countries. The primary driver of this situation was Chinese steel exports displacing production from other steel production nations.

In seaborne metallurgical coal markets, global exports were down 7% compared to 2024. A primary component of the global reduction was 9% lower exports from Australia due to a temporary mix -- sorry, due to a mix of temporary and structural reductions, including mine suspensions and some rain delays. Exports from Canada were down 3% due to reduced coal handling capacity following a ship load of fire at an export terminal.

Sharif mentioned the 6% increase in our average realized price to AUD 148 per tonne. This combines a 6% increase in our average thermal price to AUD 138 per tonne and a 4% increase in our average metallurgical coal price to AUD 203 per tonne. Having made all these comments, gains in most coal price indices since the end of 2025 is stoking optimism amongst some industry participants. We continue to utilize our scale and blending capabilities to maximize the realized prices we can deliver.

I will now hand over to Kevin Su, our CFO, to touch on the financial position.

Thanks, Brendan. The key observation is the same one that we made last quarter, Yancoal remains in a strong financial position. We ended the quarter with over $2 billion in the bank and remain free of interest-bearing debt.

When we last spoke with you, we discussed the external and temporary cost pressures at the Port of Newcastle. The ship queue at the port has now gone and with it most of those temporary cost pressures. Sharif described how we are still on track to deliver operating costs around the middle of the guidance range. We would see this as a notable achievement in the current industry setting. It reinforces our position as a leading low-cost coal exporter.

David and operation teams delivered production records, which allowed Mark and the marketing team to maximize sales and blending opportunities. Adding over $300 million to our balance sheet in just 3 months speaks to the quality of our assets. Our strengthened financial position enables us to consider dividends and to contemplate potential value-adding growth opportunities. We'll be better placed to provide further capital management commentary when we release our 2025 financial results.

I'll now hand over back to Brendan to coordinate the Q&A session.

Thanks, Kevin, and also David and Sharif for highlighting the drivers of our record fourth quarter performance. We will now move on to the question-and-answer session, starting with questions from the phone, then moving to questions submitted via the webcast. Maggie, could you please initiate the process for questions via the phone?

[Operator Instructions] Brendan, so far, we don't have any questions on the audio.

Thanks, Maggie. I'll take questions from the webcast, and I'll come back to you shortly. Let's start with some questions about the operational performance. There's a multicomponent question. I'll take it in pieces. Starting with the question, the current Yancoal stockpiles and inventory levels, how are they looking? And is the company back to matching production volumes with sales volumes given the various disruptions at Newcastle through the middle of the year?

Thanks, Brendan. Yes, look, sales and production are back to normal and are matched. We had a very, very good quarter, a strong production quarter and also a good sales quarter. And moving forward, the intention is for those to be matched.

Thank you. There's an additional component talking about New South Wales production and asking a question about coal royalties, given that the royalties were revised and new royalties were implemented 1.5 years ago. Is there any comment on the current royalty structure and how we view that part of our business?

Thanks, Brendan. Again, we've had no discussions regarding New South Wales coal royalties and currently unaware of any changes.

And also on the operational side, the Hunter Valley operations, can we comment on the production profile and its uplift in the fourth quarter and how it's running in relation to what we would see as the normalized levels?

Thanks, Brendan. David, you may want to comment on Hunter Valley operations. But again, just reinforcing, they did have a very strong fourth quarter.

Yes, I'll cover that, Sharif. Yes, look, it was a very strong fourth quarter. Hunter Valley operations as well as Mount Thorley Warkworth earlier in the year had quite a bit of wet weather. So at the halfway point of the year, both sites were a little bit behind their production target for 2025. We got more wet weather in August, but we're able to mitigate the effects of that wet weather through the capital investment that we've made in prior years. And we also saw some really good performance from our equipment fleets, our productivities. We set some remarkable records on some of our fleets for their output. And on the back of that, we're able to deliver our budgeted coal production for 2025.

So the mines are being operated in steady state. They're productive, and we're getting the most that we can from our people assets, our equipment assets and our geological assets. Thanks, Sharif.

Thank you, David. Let's segue from the production into the coal markets. Mark Salem, I presented comments on your behalf. Could you provide any additional thoughts on the coal market outlook, what we've seen so far this year and what potentially will be driving coal markets over the current calendar year?

Yes, sure. Thanks, Brendan. And thanks for reading my section. As you know, I'm traveling in rural areas, and I was a bit worried about service. So I appreciate you stepping up to read that section, And as long as people can hear me clearly.

In terms of the market, we did see some price recovery in Q4 towards the end of the year, and that was on the back of, as you said, China restocking. But we've since seen that price come down a little, not substantially, just a little bit. And this is nothing unusual coming into Chinese New Year and the Chinese buying slowing down a little bit. Coming out of Chinese New Year, I think we are anticipating that the market will again pick up a little bit in that high ash area because there still remains a need in the Southern China for the demand for the coal.

From a met coal point of view, we have had a couple of supply disruptions. And if those supply disruptions come through, that could yield a softening in the market, and we really need the steel industry to pick up, which has been in a slightly weakened situation due to the collapse of the property market in China. So in terms of going in from 2025 into 2026, probably a very similar scenario. The current pricing and world demand is really supply driven, and we need just stronger demand to really have a bigger impact into that market.

Thank you, Mark. Maggie, could I please ask you to invite people once more for the online -- sorry, the audio question channel.

[Operator Instructions]

Yes. This is Hannah from Morgan Stanley. I just have one quick question on the saleable production. So I noticed the ROM coal production rate high, but the sellable coal production to the ROM coal production, the percentage has declined to 72% in the fourth quarter 2025. And I think the ratio is lower for the Moolarben and Hunter Valley. Can we understand the reasons behind this low ratio for the saleable coal production to ROM coal production?

Okay, I appreciate the question. As I can see, looking at the fourth quarter numbers, our total ROM coal production was about 20% compared to the prior quarter, but the saleable coal production was up 11%, suggesting a slightly lower conversion. So perhaps David Bennett could offer some insights into the relative balance between ROM coal and saleable coal volumes over the fourth quarter. I suspect it's probably to do with more ROM coal being prioritized. But David, over to you.

Yes. Thanks, Brendan, and thanks, Hannah, for your question. Brendan's point there is exactly right. There was a lot more ROM coal that came out of the mines in the fourth quarter, and we're unable to process 100% of that coal through the CHPP, our coal handling plants. So the coal that we couldn't process in the fourth quarter, turning it from ROM coal into saleable coal sits on stockpiles just ahead of the CHPPs, and we will process that coal and turn it into saleable product through our warehouses on the first quarter of 2026.

Thank you, Hannah. I'll move back to the webcast questions. There's a few questions all touching on a similar topic. It's the focus on our over $2 billion cash balance reported and interest in understanding what that might mean for dividends and payout ratios heading into the financial results in February. What could we possibly say on this topic ahead of the financial results next month?

Thanks, Brendan. Look, to start with, we do have a dividend framework in our company constitution. The usual practice being for the Board to review the final position after the end of the year and then determine the capacity for dividend allocation. Kevin, you might have some additional comments you want to make in that regard.

Thanks, Sharif. I think the framework Sharif just mentioned is I think has been very clearly communicated with all the investors in the past, which is about a 50% NPAT or 50% free cash flow, whichever is higher and also balancing the debt management growth opportunities. I think companies still follow the same baseline internally. From management perspective, we will definitely balancing all these different priorities and make a decision at Board level in February.

Thank you, Kevin. Thank you, Sharif. There were several questions on that topic. I think we've covered the main focus of those questions through that combined response. Maybe I'll go to you one last time for questions from the phone line. And whilst doing that, let people know that I've exhausted the questions on the webcast. Sorry, excuse me, there were some additional further down the screen that I haven't seen. Let's have a look at these ones.

Okay. We're focusing in on the financial performance and the cash balance and cash generation that was reported. When adjusting for the $25 million Moolarben payment, that was the additional 3.75% interest. The free cash flow just to $332 million, which annualizes to $1.3 billion, an implied yield of 18% how should investors be thinking about capital management given the free cash flow generation?

So you somewhat covered the capital management component, but perhaps just worth testing that thought process on how the numbers are flowing through, the $307 million increase in the cash balance, the Moolarben payment and the implied annualized free cash flow. Kevin, could I start with you to share some thoughts on what we reported in the fourth quarter in terms of the $307 million increase in the cash balance and recognizing how that might or might not be relevant to an annualized number?

Yes. I think from the previous communication, one thing we have to appreciate is the realized price versus the price curve, there's a lagging effects and there is some timing difference we should consider. At the same time, normally, Q4 is a strong -- I mean quite a strong quarter and providing more volume from a shipment perspective as well. They all contributed to a quite a healthy cash flow.

But overall, as Sharif just mentioned, the whole objective from management perspective is to be very cost competitive compared with our peers. We are still to be the lowest cost competitive coal producer in the country. For that reason, even in an unfavorable coal price market, I think Yancoal is still generating, generally speaking, very healthy cash flow compared with our peers.

And back to the capital management philosophy we just mentioned, we will be assessing the free cash flow on a full year basis, balancing the other priorities and follow the guidance internally and also externally, we've been communicating and decide our dividend management decision by February, the bond year.

Thank you, Kevin. We've got a hypothetical question related to coal markets. So I suspect, Mark Salem, this will be one that we call on your expertise. It relates to the U.S. market and the observation is currently the U.S. exports coal into the global market, but there is speculation with AI-driven power demand levels increasing. Is there a potential for the U.S. to need coal imports to meet power demand is my understanding of the question? Is there a scenario where Australian coal could be imported into the U.S.? And is there any historical precedent for such a market setting? Mark Salem, could you share your thoughts on the coal markets and in particular, swings in U.S. exports and imports?

Sure, sure. Look, I suppose very simply, Australia has not supplied coal into Mainland U.S.A. And I say that because Australia was a supplier into Hawaii, a coal-fired power station to Hawaii many years ago, but Australia is not a supplier. U.S. is the second largest coal producer themselves, and they still have a lot of resources and a lot of surplus. They've always been known in the international seaborne market as the swing supplier.

When coal prices are high, you often see U.S. coal coming into the international seaborne market when prices are low, they withdraw and keep their production domestically. So they're not one for importing. So U.S. is not really on our radar as a future coal import market in terms of Mainland U.S.A. We do sell coal into South America and some of the South American markets as well.

Just in terms of AI, yes, there is growing demand for electricity consumption in AI in Asian countries, in our more geographically located markets. So that is something we're monitoring very closely and something we do watch in that regard. So yes.

Thank you, Mark. Looking at the questions coming through, we've got another one that's or hypothetical in nature. Given recent media commentary suggesting the potential of a Glencore-Rio merger or acquisition of some sort. The question seeks to clarify our Hunter Valley operations, which are a joint venture with Glencore. Is that joint venture or that operation subject to any change of control clauses or relevant agreements that might be triggered under such a hypothetical scenario?

Yes. Thanks, Brendan. Look, I won't be commenting on market hypotheticals at this stage. I think we're all reading the press, and it's too early to form any view as to the merit of anything of this nature at this point in time.

Fair enough. Thank you very much, Sharif. We'll come back to the market as and when something concrete requires a comment from us in relation to our specific joint venture operations or joint venture at Hunter Valley Operations.

I've now concluded all the questions on the webcast, having scrolled down and found them all in the second setting. Maggie, I'll come back to you one last time for questions via the phone line. During that time, if any questions appear on the webcast, I'll take those. Otherwise, we'll be shortly moving to close out the webcast. Maggie, could you do online questions once more?

[Operator Instructions] Thanks, Brendan. I think I'll pass back to you now.

Thank you, Maggie. Confirming I see no fresh questions on the webcast. I'll pass back to Sharif one last time for the closing comments.

Thank you, Brendan, and thank you once again to everyone who joined us on the call. I look forward to engaging with you in just over a month when we deliver our 2025 financial results.

As we reflect on the production records and the robust financial position we reported, there are 3 things I hope you'll keep front of mind. Firstly, Yancoal delivered the production records because we have world-class assets run by some of the most capable people in the industry. This is something I firmly believe. The level of production we delivered through 2025 required sustained dedication from all of our workforce.

Secondly, Yancoal is highly disciplined on cost control. In our view, keeping unit costs flat compared to last year and delivering cash operating costs around the middle of guidance would be a great outcome in the current industry setting. We see our ability to operate with comparably low cash costs as a distinct competitive advantage.

And thirdly, Yancoal increased its cash position by more than $300 million in 3 months. This is a distinct reminder that we're not only a low-cost miner, but that our position as the second largest coal producer in Australia provides great leverage to improving coal prices.

We look forward to speaking with you all again in February following the release of our 2025 financial results. Have a great day.

Thank you, Sharif. Maggie, would you please conclude the webcast?

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you for standing by, and welcome to the Yancoal Third Quarter Production Report. [Operator Instructions] I would now like to hand the conference over to Brendan Fitzpatrick. Please go ahead.

Thank you, Travis, and thank you to everyone on the call for joining this briefing on Yancoal's Third Quarter Production Report for 2025. 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 Sharif Burra, our Chief Executive Officer; Kevin Su, Chief Financial Officer; Laura Zhang, Company Secretary, Chief Legal, Compliance, Corporate Affairs Officer; David Bennett, EGM Operations; Mark Salem, EGM, Marketing and Logistics; and Mike Wells, EGM Finance.

The commentary provided today is based on the quarterly production report published on the Australian Securities Exchange and the Stock Exchange of Hong Kong announcement platforms yesterday, the 20th of October. There is no presentation pack for this conference call. The Yancoal website holds past presentations for any participants who require additional information on the company.

I'll hand over to our CEO, Sharif Burra, to provide third quarter highlights.

Thanks, Brendan. I also welcome everyone joining us on today's conference call. This is my first time engaging with you since my appointment as CEO last month. I'd like to acknowledge and thank Mr. Yue, our Chair of the Executive Committee, who took on the additional responsibilities of acting CEO earlier this year and did an excellent job conducting both roles. I look forward to working closely with the Board, Mr. Yue and the Yancoal executive team to maximize our operational performance and drive value generation for our shareholders.

Speaking of operational performance, the September quarter extended the momentum of the first and second quarters. After 9 months, we're 6% to 7% ahead of last year's production levels on a 100% basis and tracking above the midpoint of our production guidance. For the full year, we're tracking to be in the upper half of the guidance range and potentially into the upper quartile of the 35 million to 39 million tonne guidance range. As with past quarterly reports, we don't include cash operating cost per tonne in the quarterly report. At the half year, our cash operating costs were AUD 93 per tonne, the middle of our $89 to $97 per tonne guidance range.

During the September quarter and into the fourth quarter, the sector has encountered external and temporary cost pressures through the Port of Newcastle that will impact our second half cash operating costs. However, we are continuing to maintain our controllable cost discipline and expect to deliver unit costs around the middle of the guidance range for the full year. Many of you are likely aware that international coal prices remained under pressure during the September quarter. Our realized prices were effectively the same as the prior quarter. However, our attributable sales were 31% higher than in the June quarter as we were able to recover the sales volumes that were delayed in the June quarter due to disruptions at the Port of Newcastle. These increased sales volume and realized prices enabled us to finish the quarter with a cash balance of $1.8 billion.

I'll hand over to other members of the executive team to share further details, starting with David Bennett, our Executive General Manager of Operations.

Thanks, Sharif. Our total recordable injury frequency rate reduced through the quarter and was 5.71 at the end of September. We have achieved a downward trend in this statistic over the last 12 months. And although the rate is below the industry weighted average of 7.93, we aim to further improve our performance through targeted safety intervention activities.

During the quarter, we produced 15.8 million tonnes of ROM coal, which was aligned with our forecast. The ROM coal produced translated to 12.3 million tonnes of salable coal. Our attributable share was 9.3 million tonnes. These figures were also in line with our forecasts. We delivered these operational outcomes despite most of our mines encountering an above-average number of days impacted by wet weather. The benefit of past investment in pumping and water storage capacity, along with the site team's ability to respond to heavy wet weather events has been clearly demonstrated in our production performance this year.

Fortunately, wet weather impacts to rail and port activity in the Hunter region were limited. And as Sharif mentioned, our mine site and logistics teams were able to deliver most of the delayed second quarter 2025 sales volumes. At Moolarben, the longwall resumed operation early in the quarter after a scheduled move. Commissioning was completed on schedule and the longwall operated to plan for the quarter. Although wet weather delays impacted open cut mining throughout the quarter, the team achieved a site record for monthly salable coal production in August, assisted by a favorable mix of quality feed material and high yields in the wash plant.

Overall, salable coal production was close to plan for the quarter. The 2 Hunter Valley open cut mines both performed well with saleable coal production the same or better than the prior quarter. At MTW, ROM coal volumes ran ahead of plan due to overburden blasting performing well and being ahead of the schedule at the start of the quarter. This allowed the mine to deliver to plan when impacted by wet weather and other minor operational delays, which affected the mine later in that period. At HVO, ROM coal volumes were ahead of plan due to strong truck productivity and a redesigned ramp system amongst other productivity improvements.

Despite the wet weather disruptions in August and lower yields in September, the site delivered a 14% increase in attributable saleable coal over the June quarter. In Queensland, Yarrabee delivered operational performance consistent with the June quarter. At Middlemount, the mine was adjusted ahead of rainfall events to prioritize ROM coal over overburden removal, and adoption of the recovery plan developed earlier in the year. As mentioned in the past, Middlemount is equity accounted, so its volumes sit outside the production guidance that we provide. Our attributable coal production volume of 9.3 million tonnes was similar to the June quarter. This figure does not include any tonnes related to the acquisition of an additional 3.75% interest in the Moolarben joint venture, which we announced on the 3rd of October. I will now hand over to Mark Salem, our Executive General Manager of Marketing and Logistics, to provide commentary on the coal markets.

Thanks, David. Our attributable sales volume of 10.7 million tonnes was a typical mix of thermal and metallurgical coal products and as mentioned, 31% higher than the June quarter. When we last spoke, we informed you of the weather delays causing rail network outages and closures at the Port of Newcastle as being the cause of sales below production. It was our goal that this position would be recovered in the September quarter, and I'm pleased to advise this goal was achieved.

During the quarter, conditions in the international coal markets, both for thermal and metallurgical coal remain challenging. The average prices for the indices against which we primarily sell improved marginally, but the ongoing availability of supply options is still keeping prices at relatively low levels. While the warm summer conditions in Northeast Asia resulted in Japan, South Korea and Taiwan largely drawing down inventories during the quarter, imports by most of the countries we sell to are down year-on-year year-to-date compared to last year. We have seen Japan and Vietnam being exceptions with increased imports so far this year. Although there appears to be some supply curtailment from Indonesia and Colombia, exports from Australia, Russia, the U.S. and South Africa are all comparable to last year.

In the metallurgical coal markets, we have observed weak demand and a slow supply side response. Total global seaborne trade is down 11% so far this year. There has been some supply response from Australia with exports down 9% this year due to some mines not producing due to poor geological conditions and mines struggling to remain profitable. Exports from Canada are also down 5%. However, this is due to reduced coal handling capacity following the shipload of fire at an export terminal.

Overall, international coal market conditions remain challenged and uncertainty over international tariffs persist. In order for prices to recover, either a significant uplift in demand or a meaningful supply side response is required. The former seems unlikely, and the latter is occurring slowly as some mines that have entered into administration continue to produce. Although market conditions were challenged, the main indices we sell against showed some improvement over the quarter, with average prices during the September quarter up between 1% and 12%. The API5 Index averaged USD 69 per tonne and the Global Coal Newcastle Index averaged USD 109 per tonne.

The Platts Low Vol PCI Index averaged USD 144 per tonne and the Platts Semisoft Index averaged USD 117 per tonne. Our average realized prices which capture foreign exchange and lag contract structures were AUD 130 per tonne for thermal coal and AUD 195 per tonne for metallurgical coal. The overall average realized sales price was AUD 140 per tonne compared to AUD 142 per tonne for the prior quarter. Having made all these comments, there is some optimism amongst the industry participants where prices seem to have plateaued, implying they may have reached their cyclical lows.

I will now hand over to Kevin Su, our CFO, to touch on the financial position given the sales volume and realized prices.

Thanks, Mark. The key observation is the same -- is the same one we made last quarter that we remain in a strong financial position. We ended the quarter with $1.8 billion in the bank following the payment of an interim dividend of approximately $82 million and remain free of interest-bearing debt.

At the half year, we reported cash operating cost of AUD 93 per tonne. This was the middle of our guidance range and reflected a much more consistent production profile we have had this year. Since the first half, the sector has encountered external and temporary cost pressure through the Port of Newcastle. We aim to deliver incrementally more suitable and saleable coal in the fourth quarter, which should help mitigate against these cost pressures. We are also continuing to look at where we can reduce our controllable costs to balance the uncontrollable and temporary cost factors so that we -- our full year costs fall close to the midpoint of our AUD 89 to AUD 97 per tonne guidance range. I'll now hand back to Brendan to coordinate the question-and-answer session.

Thanks, Kevin, Mark, David and Sharif for highlighting the drivers of our third quarter performance. We will now move on to the question-and-answer session, starting with questions from the phone line, then moving to questions submitted via the webcast. Travis, could I please ask you to initiate the process for questions via the phone?

The first phone question today comes from [ Gevin Yu from Morgan Stanley.]

I got a question for Kevin. So I understand the cash cost range still remains at AUD 89 to AUD 97. But how is the breakdown looking like right now? So specifically, how are we projecting the transportation cost given the wet weather, the port closure and all these disrupting factors?

That's a very good question. As we just reported for the first half, [ $93 ], which is very much consistent with the previous years. So from the volume perspective, which is the most significant factor driving all this cost movement and we look at everything, it's pretty consistent. We definitely see some savings from diesel, for example, that's a favorable item. But in our view, it's not material. But at the same time, I think the healthy production profile definitely supporting maintaining the cost at a very comparable level.

Sure, sure. If I may, how about the transportation costs? What's that looking like right now? Because it's been declining for the past 2 years at a per ton basis, can we expect the same in 2025?

When you refer to the transportation cost, I think we're talking about the transportation is largely related to the rail and the port usage. And as you know, most of the costs are largely take-or-pay. So from the dollar value perspective, is largely fixed and will be helped by the increased production profile. But we did mention in our presentation that we do have a temporary increased cost from the -- through the Port of Newcastle, which is largely driven by the wet weather, as you just mentioned, and the rain issues.

Mark, do you want to add a bit more about that?

Sure. Of course, yes, no problem. [ Gavin ], very simply, the queue at the Port of Newcastle has continued through most of Q3 at very high levels. So there is a cost when you have a queue. And our priority has naturally been sales, and sales is our #1 priority to achieve the sales and any distribution costs are a function of achieving sales. And the sales is -- remains a high priority for us.

[Operator Instructions] At this time, we're showing no further questions from the phones.

Thanks, Travis. I'll move on to some webcast questions. I'll check in with you later should any further questions come through. There's a few questions on the webcast. Let's start with some questions to do with coal markets and our sales and marketing. One of the questions coming through, how much inventory remains unsold as at the end of the September quarter? And are we now moving at a more normal range?

Mark Salem, could you perhaps provide some context for what we're able to do in terms of recovering that delayed sales volume we reported at the end of the second quarter and our outlook heading into the fourth quarter?

Yes. Look, in essence, following from Q2, the tonnes were actually sold, and it was just the delays at the Newcastle port that inhibited those sales from being achieved in the first half of the year. So the sale position in Q3 due to that carryover as well as maintaining a very close watch on when those vessels arrive and making sure that they're delivered within the quarter, there was a high logistic focus to achieve what we achieved in Q3. That focus is continuing in Q4. And in that sense, and I can't be explicit in terms of what we have unsold at the moment, we always like to keep a little bit up our sleeve to take advantage of spot opportunities, but we're in a very comfortable low-risk scenario from a sales point of view, and I can say that quite confidently.

Thank you, Mark. Let's extend on that concept of looking at opportunities in the international markets. What can we see in terms of supply side effects coming through from the recent anti-involution efforts announced in China. There's an observation coming through from the person asking the question that they believe a reasonable amount of Chinese domestic production might be uneconomic at current prices. What can we see about -- what can we say about the opportunities we're seeing for our products?

Yes. Look, it's interesting talking to our Chinese customers, our Chinese colleagues. The anti-involution policy really hasn't been fully implemented throughout most of China as yet. And it's only touched on a few regions. And we had -- we did see some supply curtailment as a result, but nothing really substantial in the whole scheme of the situation. What's really been significant coming out of Q3 going into Q4 is the warm summer, and we've seen a significant drawdown in inventories at the power utilities. And we have seen a little bit more of a market recovery in the last week or 2. And that's quite encouraging coming into the winter buying season.

Thank you, Mark. Let's move on to the topic of the capital expenditure and will lead into some questions about the cash balance. Starting with the topic of capital expenditure. The question is what capital expenditure was incurred in the third quarter in context of the guidance range being AUD 750 million to AUD 900 million for our equity share for the full year and what remains over the fourth quarter.

Now I'm mindful that as I pose this question, there's only so much we can say in a forward-looking sense. But if I could turn to Kevin for an initial comment on the capital expenditure profile.

Sure. Refer back to the capital expenditure, if you refer back to Yancoal's presentation for the financial year-end 2024, when we refer to the guidance, there's a statement about what kind of CapEx will cover largely due to our fleet upgrade on the high equipment. And all those equipment still basically being spent and invested based on our normal practice. And as what we just disclosed, it's largely consistent with what we have been planning. So basically still driven by those big equipment just spent. Yes.

Thanks, Kevin. And that's obviously in the context of the just over $400 million we reported for the first half and the comment that we're on track for guidance this year to sit within the range. Looking at a follow-up question on a related topic. One of our participants wants to understand the total cash outflow. There was -- the interim dividend was paid $82 million. We maintained the cash balance of $1.8 billion, approximately the same as at the end of the second quarter. What context can we provide for the cash outflow at this point in time?

Okay. This is Kevin. I will answer this question. It's a very good one. Yes, I think that's a very good point about the Q3 cash balance, Q2 cash balance are largely similar. One thing we want to highlight the good weather actually come into the late Q3, which means we've been catching up very quickly for our logistics and shipment, which is something Mark already mentioned. From a collection perspective, it obviously takes time for all the shipments to be realized in cash, and that's the reason why the cash hasn't been fully realized yet.

Thanks, Kevin. And could I confirm from Kevin and/or Mark, the sales that we're catching up from the second quarter delays, some of those were still priced from earlier in the year. So we often talk about a lag effect on our realized prices that somewhat extended in the current circumstance. We're getting prices from earlier in the year and in the context of prices improving second quarter to third quarter, we may not have yet seen all that benefit coming through.

Yes, correct. In terms of second quarter to third quarter, we did have a substantial amount of carryover due to the vessels in the queue. A lot of those vessels were -- if they were index-linked orientated, they would have already matured based on their price being of the previous period. And therefore, that carryover will continue whilst we still have a vessel queue.

Thank you, Mark. Travis, could I come back to you to see if any questions are coming through on the phone line.

[Operator Instructions] Confirming at this time, we're showing no further questions.

Thank you, Travis. We've got a question coming through on the webcast. It relates to Yancoal and external expectations on mergers and acquisitions and/or dividend payments. It essentially goes to the concept of capital returns and capital management. The participant makes the observation that understandably information is limited, but what could be said at this point in time about capital allocations and priorities and how the company might proceed in the forward periods given the context of where we appear to be in the coal price cycle.

Thanks -- this is a very good question. I think I will leave a part to our CEO, Sharif. I will talk about the capital allocation without any interest-bearing debt, as mentioned earlier, it's largely between the growth, how to balance the growth and the dividend. We've been consistently following our guideline for the dividends. And from a growth perspective, in addition to the organic capital investment, which is quite a sizable investment already, as mentioned earlier, we're still looking for all different sort of opportunities. But all those opportunities clearly is not just as expected, always there. And we are currently working pretty hard to assess.

But I will leave this to our CEO, Sharif to make for the comments.

Yes. Thanks, Kevin. We obviously don't comment on specific scenarios. What we have said in the quarterly report is our strong financial position does enable us to explore opportunities, particularly those that might arise during the cyclical downturn. We are continually evaluating any opportunities in the context of the current market condition, and we will continue to do so.

Thanks, Sharif. I believe there's one further question coming through on the phone line from Peter at CICC.

Travis, could you confirm we have a question available?

That's correct, Peter, if you'd like to ask your question.

Yes. I was just wondering if there has been any marginal change in your view on the per ton basis production cost because in the interim results, you stated that the full year actual per ton production cost is going to land at the midpoint of the guidance range with the potential to come in below the midpoint. But in yesterday's results, the downside potential wasn't reiterated.

Just wondering, has there been any shift in that original expectation?

Thanks, Peter. Your observations are correct. At the half year result, we talked about our reported costs $93 per ton and potentially moving lower for the full year. In the most recent report, we've talked about expecting to be around the midpoint of the guidance range for the full year. The context there is, as we've touched on through the call, there are some of those external and temporary pressures that are affecting not just Yancoal, but miners through New South Wales more broadly. But I think you can gauge the materiality in terms of we were hoping to move below the midpoint. We're now going to be around the midpoint. So whilst we are facing some incremental cost pressures in the short term, we're still comfortably within our guidance range. And as mentioned, looking at the midpoint for the full year as we sit right now.

I see. Just a follow-up on this. Looking forward, is it possible for these factors to, say, diminish?

Peter, could you please repeat the question? It was a little disrupted coming through.

Yes. Is it possible for these factors just you're just talking about to diminish in the future?

Yes. So as I did use the reference temporary, we heard comments earlier from our team about the ship queue at Newcastle and some of the delayed effects there. So as the ship queue unwinds at Newcastle, we are optimistic that these factors will prove temporary, and they will abate through the remainder of this year. And we'll wait and see where we end up, but ideally, we'll be back closer to normal operating conditions from the start of next year.

Travis, any further questions on the phone line before I go back to the webcast?

At this time, we're showing no further questions via the phones.

Okay. I see one -- I see several questions coming through on the webcast. One of them asks, what is our expected profit for the upcoming quarter?

Quite simply, we don't forecast profit. We do provide the guidance on our production range, cost range and capital expenditure range, but we don't provide a profit forecast either on a quarterly or a financial year basis.

Looking back to the coal markets. The international coal markets still remain challenged. How do we explain the price up in Q3? And what's our outlook for Q4?

Mark, that question comes from Joyce, one of the analysts covering the stock. Perhaps we could get some context for our views that there are challenges in the sector, but the average prices did move up on a relative basis compared to the prior quarter.

Yes. Thanks, Joyce. The prices moved up and the overall realized price in U.S. dollars was better as well because we did have that carryover as was previously explained. In terms of the market movements throughout the quarter in Q3, we have experienced a very hot Asian summer, and that's prompted a lot of spot demand, and that's initiated some price appreciation. When the -- in China, when the anti-involution concept was first spoken about, we did see a movement throughout the Q3 quarter in the API 5 prop up. It then propped back down a bit again when that was realized it wasn't just a formal policy as yet.

But as I explained, we are seeing a drawdown in inventories, which should promote prices coming back up again in the API 5 market. In the GCNewc market, we saw a little bit of an increase on the back of the threat of gas supply, in particular in -- due to the Middle East crisis. However, that was a very short time frame, and then we've seen API 5 has dropped down -- API -- sorry, GCNewc prices dropped back down again. So that was a little bit of the reasons behind the reasons why the average prices are up quarter-on-quarter. Going into Q4, we are seeing the API 5 on the back of rebuilding of stock inventories and in particular, coming into the winter buying season, we should see that continue to appreciate a little bit. We're not expecting any dramatic price increases and the GCNewc will remain relatively flat, in my opinion, while supply is very strong still.

Thank you, Mark. Back to the topic of potential mergers and acquisitions or transactions, there's an observation coming through from a participant on the line that they read in the press speculation of a potential transaction with Glencore assets. If it's true and eventuates, there's the potential that Yancoal will need to come to the market for capital. Sharif, can I turn to you in the first instance to reiterate our available comments on potential M&A, and then I'll move on to Kevin for a comment about our capacity for funding. scenarios, should they appear at some point?

Yes. Thanks, Brendan. Again, just to reiterate, we don't comment on specific scenarios. I think I'll leave it at that.

Thank you. And we've talked in the past, Kevin, about our financial capacity and our preparedness to look at opportunities. What can we say about our ability to fund scenarios going forward without looking at specific examples?

Without referring to any specific examples. But generally, we can say Yancoal still maintain a very strong balance sheet and with ability to access the debt market. We also talk about any potential opportunities for Yancoal to raise share capital, which we made the point in the past. We'll prefer to read that, if possible. Thanks.

Thank you, Kevin. There's a question coming through changing topics. Queensland royalties, I suspect prompted by various media commentary in recent times. Do we have any outlook on Queensland royalties? Any anticipated change or sector views on what might unfold?

Yes. Thanks, Brendan. Look, at this point in time, we don't have any further information, and we're not anticipating changes at this point in time.

There's another question. It's again on the topic of CapEx. Possibly the person missed the discussion earlier, asking if there's any comments on CapEx in the past year quarter and whether this will increase or decrease towards the end of the year. The comments we made earlier on the call, at the half year, we were sitting comfortably within our guidance range for CapEx being $750 million to $900 million. And that observation has been retained. We'll be sitting within the range.

CapEx profile is somewhat lumpy in nature insofar as there are specific allocations, but we generally make the observation quarter-to-quarter, it roughly balances out. But we'll report the final CapEx profile in the financial results at the end of the year.

That's all the questions I have on the webcast. I'll come back to Travis for one last opportunity for any questions on the phone line. And then if nothing comes through on the webcast, we'll move to final comments.

And Brendan, confirming we're not showing any questions via the phones at this time.

Thank you, Travis. It appears we've addressed all the questions for the third quarter production report. Sharif, could you provide some closing remarks before we end the call?

Thanks, Brendan, and thanks once again to everyone who joined us on the call. Look forward to engaging with you regularly and sharing updates on Yancoal's progress. While we've been frank about the coal market conditions, it's worth noting that the industry has been through price cycles in the past.

Given our Tier 1 assets operate in the bottom quartile of the cost curve, our company is robust and is well positioned for an upswing in coal prices. There are 3 things to keep front of mind. First, we continue to deliver a strong operational performance. We're on track to deliver production in the upper half, if not the top quartile of our guidance range for the year. This would be our best performance in many years. Second, we are highly disciplined on cost control.

In our view, keeping unit costs flat compared to last year and hitting the midpoint of our cash cost guidance range is a great outcome in the current industry setting. Our ability to operate the mines with comparably low cash costs is a distinct competitive advantage. And thirdly, we hold about $1.8 billion in cash and have good access to debt markets. This places Yancoal in a strong financial position relative to peers and allows us to continually evaluate opportunities to create value for shareholders. We look forward to speaking with you all again in January after we release our fourth quarter report. Have a great day, and thank you.

Travis, could you conclude the call, please?

Thank you.