Ann: June 2024 Quarterly Report, page-17

Well run company, acquisition was only announced in Oct 23, and here we are in Jul 24 having completed the acquisition, doubled production, doubled sales, diversified the product mix, entered into the met coal business, provided a platform (infrastructure) for Winchester South.... and after all of that they have a miserly A$1.3B of debt (from A$1.5B cash position Jan 24)...

Given transaction was US$2.0B payable on completion (already paid the US$100M deposit) and comparing to Jan 24 cash position, WHC have produced FCF of ~A$200M...

This doesn't sound like much, however this is during a time of significant expense (managing acquisition), and during a time of significant inventory build. At the average QLD sale price of A$271/t the inventory build of 800kt represents an increase of A$216M in working capital (and I don't have a view on what normalised inventory should be, this is just the increase since acquisition). Expect one off acquisition related expenses to be gone, and high inventory position to be normalised by next quarter...

The sell down still on the table has the potential to return WHC to a net cash position quickly! Albeit they do have US$1.1B in deferred payments, and a large contingent payment. So in my view the sell down must happen to deleverage the balance sheet to provide flexibility.