Don't forget that when the sale was announced that the price of coking coal was at $USD350. Nobody expected it to be around $USD200 a year later. Sure, at current prices and let's say at $USD$250 it will make profits on the QLD operations but that's a heavy discount in profit to $USD350.
Cost of production for the June 2024 quarter for B&D was $147p/t. Cost of production for FY2024 for NSW coal operations was $114p/t
Guidance for 2025 for the group is $140-$155p/t (let's say $150p/t)
Anyone notice that they did not show guidance for each operation? That is NSW and QLD separately? Any ideas why not?
Let's now assume that NSW for FY2025 is say $120p/t (5% increase from 2024) , what does that leave us as a cost of production for QLD?
I will tell you. The group operations are essentially 50/50 as ROM production. Therefore to get a group cost of production of say $150p/t, QLD cost of production for 2025 must be around $180p/t.
$120+$180=$300 x 50% = $150 group cost of production.
Then you have to take away the 30% that is managed (Nippon & JFE), therefore less profit. Sure they get $1.6 billion. A lot of that is towards capex, deferred and contingent payments. What about the interest on the loan and the $1.7 billion loan that was used to fund part of B&D purchase?
Doesn't look to rosy to me at current met prices or even say $USD250 with the continuing appreciation of the AUD.
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