Please Explain, page-31

Hey Cyberstar

It's because WHC has substantially more debt than NHC

WHC Enterprise Value = $2,000m (debt of $920m plus market value of $1,080m [1026m shares x $1.05 share price])

NHC Enterprise Value = $1,400m (debt of $360m plus market value of $1040m [831m shares x $1.25 share price])


While WHC have more mines and greater annual production than NHC (It's about 15m tonnes for WHC vs about 10m tonnes for NHC) the WHC mines are much higher cost of production than NHC - WHC AUD $70 tonne (pre royalties and capex) vs about AUD $50 tonne for NHC.

The simple fact is at spot price of coal of US$50 tonne WHC is going to burn about $250m to $300m of cash this year while NHC is likely to be cashflow positive.

I think there will be a time to own WHC but I don't think it is yet.

WHC has almost as much debt now as it did in 2015/2016 when coal prices were depressed. Back then the share price bottomed around $0.35-$0.40. However, back then its operating costs were only AUD$56 (pre royalties) so it was actually able to generate some free cashflow to start paying off the debt. This time with costs at AUD$70 (pre royalties) and an $AUD that is 5% to 10% higher than back then it is unfortunately burning quite a lot of cash at these depressed spot prices.