Peabody Energy Corp (BTU) 2025 Q4 法說會逐字稿

Good day, and welcome to the Peabody Quarter 4 2025 Earnings Conference Call. (Operator Instructions) Please note that this event is being recorded.

I would now like to turn the conference over to Kala Finklang, Director of Investor Relations. Please go ahead.

Thanks, operator, and good morning, everyone. We appreciate you joining us for Peabody's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Peabody's President and CEO, Jim Grech; Chief Financial Officer, Mark Spurbeck; and Chief Commercial Officer, Malcolm Roberts. After our prepared remarks, we will open up the call for questions.

Before we begin, I want to remind you that our remarks today will include forward-looking statements. Please review the full statement contained in our earnings release and consider the risk factors referenced there, along with our filings with the SEC.

I'll now turn the call over to Jim.

Thanks, Kala, and good morning, everyone. I couldn't be more proud of the work of our Peabody team, which turned in an excellent quarter and year that was marked by a number of achievements. We are also seeing improving market fundamentals and have a full agenda of priorities for the new year.

Safety always comes first at our operations, and we turned in another record safety year with an incident rate of 0.71 per 200,000 hours worked. That's 12% better than our prior all-time record set just a year ago. It is still safer to work in a Peabody coal mine than a grocery store or shopping mall based on national incident rates.

Peabody also prides itself on environmental excellence as witnessed in 2025, where we reclaimed twice as many acres as we disturbed. This allows us to shrink our footprint and reduce our financial obligations over time. We also tied our all-time record low for environmental notices of violation.

Operationally and financially, the quarter was right down the fairway and meeting or surpassing expectations across key metrics. Mark will cover these results in more detail in a few minutes.

I'm pleased to announce that I was in Australia last week, where the team was installing the very last shield and putting the finishing touches on the Centurion mine in advance of starting longwall mining, well ahead of its original schedule. I have to say the culture that has been built at Centurion is outstanding, and our team has charged up and has started mining some of the best metallurgical coal in the world.

Let me remind you of some of the extensive benefits Centurion has on the Peabody portfolio. First, Centurion is expected to ship an average of 4.7 million tons per year of premium hard coking coal in a world that we remain convinced is structurally short of that product over time. We expect the mine to deliver 3.5 million tons in 2026, ramping up to that 4.7 million mark by 2028.

Second, Centurion's product is of the highest quality and coupled with proximity to key demand nodes in Asia, results in full benchmark pricing. Our realizations across our entire met coal segment are expected to increase from 70% of the recognized benchmark in 2025 to 80% this year. And as volumes ramp up to 4.7 million tons, we expect it will further exceed that 80%.

Third, this mine is a long-lived asset. Combined with the Wards Well acquisition in 2024 that allows significant development to the north, Centurion accesses the coveted Goonyella Middle Seam and is expected to have a mine life of 25-plus years with an integrated mine plan of 140 million tonnes.

Finally, we previously reported a net present value for the project of $1.6 billion with all-in cost of $105 per short ton in 2024 dollars at an average benchmark price of $210 per metric ton, a level we are already above today. Our latest assessment is that Centurion alone represents an NPV of $2.1 billion at $225 benchmark pricing. So top realizations with full benchmark pricing, low cost and a long mine life.

Centurion is truly the cornerstone asset in our strategy to maximize long-term shareholder value and to intentionally reweight our portfolio toward higher-margin metallurgical coal. This event marks the culmination of years of disciplined strategic investment and have positions Centurion to deliver the scale, cost performance and premium product quality needed to meet the growing global demand for high-grade steelmaking coal.

Also during the quarter, we continued to make good progress in our asset optimization activities. Here, our goal is straightforward. Our Peabody development division is tasked with evaluating our vast land and mineral holdings to maximize our long-term earnings and cash flow potential from these assets.

Actions include our work to locate renewable projects and formerly mined lands, notably in the United States with R3 Renewables. We're also working on Australia at the Centurion mine, developing a gas power station to convert waste gas to electricity, starting at 5 megawatts and expanding to 20 megawatts. Activities also include a small plan facility to capture coal seam gas that will then be converted into LNG.

During the fourth quarter, Peabody development advanced activities in several developing areas. First, we conducted additional work to assess the rare earth and critical mineral potential at our US mines with extensive testing conducted at our PRB mines. Second, we held initial discussions with government officials and private partners regarding the citing of power plants that would make use of Peabody's extensive US coal reserves. And third, we are working with the Trump administration to increase US coal exports from the West Coast to the growing Asian coal markets.

Earlier this week, I had the opportunity to participate in the CSIS sponsored event securing critical mineral supply, a government industry dialogue held in partnership with the Critical Minerals Ministerial and the Trump administration. I want to express our appreciation to the White House National Energy Dominance Council and Department of Energy for including us in this dialogue. This discussion underscored the growing national focus on strengthening domestic critical mineral supply chains and the important role US companies can play in that effort. We were pleased to contribute our perspective, particularly as we continue to evaluate opportunities where Peabody's assets, expertise and partnerships may support emerging critical mineral initiatives. We look forward to continued engagement as the federal government and industry work together to address strategic supply chain challenges.

Regarding Peabody's progress in pursuing opportunities with rare earth and critical minerals, let me share where we are at, at this stage. Peabody has conducted a robust critical mineral testing program since the middle of last year in excess of 800 samples from the PRB alone.

In addition to the standard array of light rare earth elements, our assessments to date have uncovered promising concentrations of heavy rare earths and other critical minerals. We're encouraged by the presence of heavy rare earths, which account for an estimated 21% to 28% of the critical mineral oxide concentrations. I would also note that targeted concentrations of germanium and gallium in select locations show good potential. In addition to our testing program, Peabody is developing flow sheets with multiple third parties to support the technical and economic assessments as well as the ultimate production of rare earth products.

Peabody is also continuing to work with government agencies at the state and federal level. We were pleased to be recommended to receive funding of a $6.25 million grant by the Wyoming Energy Authority for a pilot processing plant in the state. The application now goes through a public comment period before consideration by the governor later this month.

At this time, we are taking an options-based approach using multiple feedstock locations and process partners. We do so to expand our opportunities for success and potentially accelerate time to market. These are still early days in our rare earth and critical mineral journey, but we are sufficiently encouraged to continue our progress here to further evaluate the commercial potential. We look forward to sharing more detail as this work reaches appropriate milestones.

Turning to energy policy. Several weeks ago, I was honored to be appointed by the US Secretary of Energy to chair the newly reconstituted National Coal Council. Key priority of the NCC will be to advise the administration on ways to expand use of coal fuel generation, build new coal plants and export greater quantities of US coal.

Why should coal be central to any discussion of US energy policy? Coal is quite simply America's largest energy asset. More than that, America has more energy in its coal than any nation has in any one energy source, more energy than Saudi Arabia has in its oil and more energy than Russia has in its natural gas. It would be irresponsible to not use this unique asset for the benefit of the American people. It's clear that Peabody is at the intersection of multiple policy and market trends, both structural and cyclical that are moving in a highly favorable direction.

To set the stage for our market discussion, I'll note that the International Energy Agency recently came out with their annual coal report. 2025 once again set an all-time record for global coal use at 8.8 billion metric tons. That means that world coal use has nearly doubled in the 25 years since the new century started as nations pull people from poverty, urbanized and electrified, a trend that continues today. This occurs at a time when US entered a deep freeze and unsurprisingly to us, coal moved to the top of the dispatch list on many of the most extreme days.

Renewables were largely unavailable in multiple regions. And natural gas prices more than doubled in just one week as utilities were forced to compete with residential customers and businesses at their most vulnerable times, not so with coal plants, which can stockpile months of fuel supplies and face nowhere close to the price volatility and surges of some other forms of energy. Peabody is seeing substantial strength in the markets for both domestic thermal and seaborne metallurgical coal markets.

For more on supply-demand dynamics, I'll turn things over to our Chief Commercial Officer, Malcolm Roberts.

Thanks, Jim, and good morning all. I'll start with the seaborne metallurgical coal markets, where benchmark pricing has risen to its highest mark in 18 months and increased 15% from $190 per tonne levels of the beginning of the fourth quarter. Since the beginning of the year, pricing has increased a further 15%.

For several quarters now, we've been projecting that Chinese anti-evolution policies would tighten up the supply and demand dynamics in the global metallurgical coal markets. That trend continues in China. We've seen a shuttering of unprofitable steel mills, increased safety checks at coal mines, implementation of 276-day work limits and other on-the-ground changes that have worked together to form the foundation for met coal pricing as we moved into 2026.

2025 saw the increase of blast furnaces along the coast in India and the gradual transition of global steel production from China to India is a trend that we expect to continue during 2026. We expect India to increase its direct purchase of coking coal as well as supportive coke imports from countries such as Indonesia that also don't have major domestic metallurgical coal supplies. China is still exporting more steel than the world needs and in the process of suppressing steelmaking from other nations that rely on the seaborne markets for a much greater percentage of their coking coal needs.

We have begun to see some protectionism come into play in Europe and India that will likely support domestic steel production during 2026. Metallurgical coal and in particular, hard coking coal markets were tightening and prices were improving even before the monsoon season settled into Queensland, further constraining met coal production and transportation. Overall, this market backdrop makes a perfect time to bring on increased shipments from the Centurion mine.

Thermal markets have remained largely stable in recent months. The benchmark Newcastle product is approximately $115 per tonne. That's within a 10% of where it was two years ago, one year ago and one quarter ago. That's the epitome of a trading range, even with a substantial amount of individual country supply and demand dynamics affecting individual coal flows, but it also remains a highly profitable trade for Peabody with lower-cost seaborne thermal coal production.

A fundamental to watch on the supply side is the recent government policy adjustments in Indonesia, where production quotas for thermal coal, if enforced, could have the effect of removing more than 100 million tonnes of thermal coal from the seaborne market in 2026. How all this plays out is yet to be seen. However, it followed through on this dynamic can be seen as positive for Newcastle pricing as the year progresses.

This occurs against the backdrop in which Asian countries continue to add coal generation capacity. China added some 80 gigawatts of new capacity in 2025, and China is expected to launch more than 100 coal units this year. India's coal-fired capacity has been projected to rise 87% to reach 420 gigawatts by 2047. Indonesia, the world's largest thermal coal exporter, saw power capacity more than double in the last decade. And Southeast Asian coal demand is growing at a 4% compound annual growth rate, while Vietnam set another record for coal use in 2025.

Turning to US coal markets. I'd point to one number that is most noteworthy of all. Coal fuel generation was up an estimated 13% year-over-year in 2025, 13%. That ran well ahead of any projections. That occurred at the time when coal production was up just an estimated 4% in 2025. To make that equation work, utility stockpiles declined an estimated 15% year-over-year. Coal has re-emerged as a solution because demand growth was not only unforeseen, but unplanned for because other forms of energy are constrained and because existing US coal plants can run much harder. That's why Peabody calls coal plants the best form of incremental generation for the next several years. Other forms will struggle to provide incremental growth versus what is planned.

Let's check through the list. Renewables continue to be built out, but don't solve the problem of data centers and factories that need 24/7 generation. Natural gas has been increasingly relied upon, but gas generation has a substantial backlog. Many gas plants ordered today are unlikely to be placed in service before 2030. Gas prices have remained highly volatile in recent months, of course. Nuclear generation faces lead times and permitting that make it best a 10-, 15- or 20-year solution.

And then there's existing coal plants, which ran at 42% of capacity in 2024 versus 72% at historical high levels. Running those plants harder could add up to 10% of total US power generation from 2024 levels and accommodate US power demand growth by itself for multiple years. That would also translate into more than 250 million tonnes per year in additional coal demand.

Coal plants offer a great cost advantage for utilities and consumers. A recent report punctuates this. Energy Ventures analysis looked at the cost of replacing existing coal plant generation with comparable new generation from other sources. And these results strongly favor continuing to operate existing coal plants. For instance, replacing retiring coal plants with new solar sources would be 10 times more expensive than continuing to operate the coal plants. Coupled with economics, grid stability supports coal plant extensions.

Plants that were slated for retirement have been extended in record numbers with 35 gigawatt of coal plants having seen their proposed retirements be deferred. Just several weeks ago, we saw another plant extended into 2026. How is this changing utility behavior? In one more punctuation point added to the coal is back story, Peabody reached agreement recently with a major Midwestern utility for more than 20 million tonnes of Illinois Basin coal over five years. The contract exceeds $1 billion in total sales over time. We have sourcing flexibility from multiple mines and market reopeners. This is just one more sign, of course, that USA coal plants are here for the long term.

Mark, over to you.

Thanks, Malcolm, and good morning all. Let me start with a brief overview of our financial performance. In the fourth quarter, we reported net income attributable to common stockholders of $10.4 million or $0.09 per diluted share and adjusted EBITDA of $118 million, a 19% increase from the prior quarter, supported by higher seaborne thermal realizations and consistent focus on controlling the controllables.

We generated $69 million of operating cash flow from continuing operations during the quarter and $336 million for the full year. Peabody ended the year with $575 million in cash and total liquidity above $900 million, reflecting disciplined capital deployment through the period of intense development at Centurion and consistent cash generation despite lower than mid-cycle seaborne coal prices. We ended 2025 with another quarter of strong execution.

For the full year, results met or exceeded original guidance for 7 of 8 volume and cost metrics. Seaborne thermal delivered 3.3 million tons, exceeding expectations. Realized export pricing averaged $81.80 per ton, up 7% from the third quarter. Costs came in below the low end of guidance and 12% lower quarter-over-quarter, supporting a robust 31% adjusted EBITDA margin and $63.5 million of fourth quarter EBITDA.

For the full year, the segment reported $222 million of adjusted EBITDA and total capital requirements were a mere $40 million. Costs were down over $3 per ton year-over-year, driven by disciplined cost management and higher production at the Wambo open cut.

Seaborne met shipped 2.5 million tons, up $400,000 from the third quarter and above the fourth quarter target. Realized pricing began to improve and costs at $113 per ton were consistent with expectations. The segment delivered $24.6 million of adjusted EBITDA in Q4. For the year, the segment generated $56 million of adjusted EBITDA. Shipments increased 1.3 million tons year-over-year to $8.6 million, but better yet, full year costs beat original guidance by more than $10 per ton. Peabody's Met segment will be further meaningfully improved with the start-up of Centurion, increasing volume to 10.8 million tons in 2026 and increasing segment-wide price realizations 10% versus the premium hard coking coal index.

The US thermal platform contributed $63 million of adjusted EBITDA in the fourth quarter. For the full year, the segment generated nearly $250 million of adjusted EBITDA against only $57 million of CapEx, demonstrating the consistent free cash flow generation capability of our reliable, low-cost US thermal portfolio. Over the last five years, the US thermal business has generated $1.1 billion of cash, net of capital investment.

The PRB operations shipped 22.3 million tons in the quarter and 84.5 million tons for the full year, almost 5 million tons or 6% more than the prior year, answering the call for more reliable and affordable power as a result of increasing load growth. The segment contributed $44.8 million of adjusted EBITDA in Q4 and $175.8 million for the full year. Interestingly, a 6% increase in tons resulted in a 20% increase in EBITDA margin year-over-year in a mostly flat price environment, demonstrating torque to higher volumes, tight cost management and the benefit of reduced federal royalties.

The other US Thermal segment contributed $18.1 million of adjusted EBITDA in the fourth quarter on shipments of 3.7 million tons, exceeding expectations. Twentymile is performing well in its new longwall panel and mining is expected to continue through the second half of 2027 as we fulfill the existing contract with the Hayden plant in Colorado. Full year adjusted EBITDA reached $71.4 million.

Looking ahead to 2026, I'll briefly review guidance for the full year. Seaborne thermal volumes are expected to be lower than 2025 due to the closure of the Wambo underground mine in Q3 last year and lower production at Wilpinjong due to reduced operating phases as the mine progresses into narrowing pits ahead of the Pit 9 and 10 extensions. Shipments are targeted at 12.5 million tons, including 8 million export tons. Costs are projected to be above 2025 levels at $50 per tonne on lower production. We anticipate a quality mix of 45% Newcastle and 55% higher ash product.

Seaborne met volumes are projected to increase over 2 million tonnes to 10.8 million with the start of longwall production at Centurion. At the CMJV complex, we expect production to increasingly transition to the Coppabella mine as it completes the additional bench of pre-strip to improve high-wall stability in the third quarter of 2026 and Moorvale depletes its reserves.

Met coal costs are targeted at $113 per tonne, about $1 lower than last year. And we anticipate segment-wide average price realizations increasing to 80% of the premium hard coking coal index. For US thermal, we expect a very similar year to 2025.

In the PRB, we expect shipments between 82 million and 88 million tons and have 78 million tons priced at $13.40. Costs are expected to be consistent with 2025 levels at $11.50 per ton. Other US thermal volumes are expected to be 13.7 million tons. We have 13.2 million tons priced at $54.40 and expect costs of $47 per ton, also in line with or better than 2025 results. Total capital expenditures are estimated at $340 million, $70 million lower than 2025 as Centurion begins longwall production.

As we reflect on 2025, Peabody delivered a year marked by disciplined execution and strategic investment. Our balance sheet remains robust and provides sufficient flexibility through price cycles and the step change in met coal production reshapes our competitive position. We have invested approximately $750 million of organic cash flow to develop and expand Centurion, an investment that significantly enhances our leverage to premium hard coking coal markets and provides a cornerstone asset for the next 25 years. As a result, Peabody enters 2026 from a position of strength with an enhanced met platform, rapidly improving PLV benchmark prices, continued strong cash flowing thermal operations and overall supportive market conditions. Together, these factors position the company exceptionally well for the year ahead.

I'll now turn the call back over to Jim.

Thanks, Mark. That closes the book on a successful 2025, and let's focus for a minute on our full slate of priorities for the new year. Peabody's key focus areas include driving safe, reliable and efficient operations across the portfolio. That's essential in the mining industry and remains our clear number 1 priority, achieving full operational performance at the Centurion mine. The promise of Centurion now turns to reality for our shareholders.

I'll remind investors that this feeds into the increasingly short premium hard coking coal market, continuing the strong EBITDA to CapEx margins from Peabody's high cash flowing thermal coal assets. That's true for both the seaborne and US thermal business preserving balance sheet strength and improving free cash flow to support shareholder returns. Our first priority for the use of cash remains shareholder returns, and all other potential investments must pass a high hurdle to compete for funding. And finally, progressing work streams to best advance and monetize commercial Peabody development opportunities.

With that, operator, we're happy to turn the call over for questions.

Katja Jancic, BMO Capital Markets.

Starting on the cost guide for '26, especially for your Australian operations. What do you assume for the Australian dollar in the cost guide? And then also, what do you assume on the met side for met pricing?

For the Australian dollar, we're looking at $0.70, pretty much where we're at today. And then we're using a $225 benchmark pricing.

And then on the Centurion development, just looking ahead, can you remind us how much CapEx is potentially still left, especially to get to that northern part?

Yes. So we're obviously starting the longwall here imminently in the South. So that initial $500 million has been spent. We talked about $750 million in total. There was some already allocated to the north as well as the acquisition of Wards Well. When we move forward now into 2026, nothing's changed from what I said before. It's probably about $100 million a year in development for the North for the next three years. On top of that, there's some sustaining capital in the South, call it, $25 million a year.

Nick Giles, B. Riley Securities.

My first one was just on the domestic thermal side. I mean pricing in the PRB step down in 2025, volumes rose. It seems like there could be a similar setup in 2026. So my question is how should we think about pricing in '27 and beyond? I mean is there a scenario where prices revert to the upside? Or is there kind of limited torque because of existing contracts? Appreciate any color there.

Malcolm, would you like to comment on that, please?

Yes, sure. Look, the way we price is we layer in volumes probably from three to four years before the delivery period. And I'm not going to give specific guidance in terms of how contracted we are for '27, but there's still quite a lot of contracting to be done there. And so that should be exposed to a favorable pricing environment because our view is that this is a favorable pricing environment vis-a-vis the last two or three years.

Got it. And then on the volume side, I mean, do you think there is demand for incremental tonnes beyond your current guide? I know increasing volumes is a different story, but would there be incremental demand?

Absolutely, I think so. I mean we started the year with quite a lot lower inventories. We've had a reasonable cold snap, and we're already seeing those RFPs out there in the market. We're responding to those today. So I still see incremental demand. There was incremental demand last year. I see something playing out fairly similar. And I guess in terms of Peabody participating on that, our view is value over volume. So it will be about where the price point is for those incremental tonnes.

But I think, as we've said in previous calls, the latent supply and capacity in the basin is starting to become quite stretched. So I'd expect that people are pretty careful as to how they bid into these opportunities moving into this year.

Understood. I appreciate that color. One more, if I could. I mean when we look at seaborne thermal costs, the midpoint at $50 a ton, a pretty meaningful step up there year-on-year. So just was curious on what are the drivers there? Is it really just the lower volumes? Is it mainly the drag at Wilpinjong -- and how should we see things improve over the course of the year?

Yes, Nick, for year-over-year cost in seaborne thermal, it's really a story of the lower production volume. So certainly an increase from lower production at Wilpinjong. There's a bit also lower production Wambo Open-Cut, but much less, so. And then the answer to Katja's question there about AUD0.70, that's about $0.04 higher than we realized last year. So that has probably about a $3, $4 impact as well.

Nathan Martin, The Benchmark Company.

Mark, just curious, how should we think about the cadence of shipments as the year progresses, especially for the seaborne met and seaborne thermal segments. It would seem the first quarter probably anticipated to be the weakest just given the Centurion longwall will just be starting up. And obviously, you've got the sequencing you called out at Wilpinjong. So any other operational items as well to keep in mind for the year, longwall moves, et cetera, just when we think about that cadence?

Yes. You got your finger on the right items there, Nate. Seaborne thermal much less than ratable in the first quarter. And that's Wilpinjong and Wambo Open-Cut being less than ratable, just simply from a mine sequencing perspective. So that will bounce up nice for us in Q2 and even higher in Q3.

When we think about Seaborne Met, we do have the two longwall moves. So both Metrop and Shoal Creek are going through a longwall move. So that's going to lower the production and obviously, just getting about two months of production from Centurion versus a full quarter. When we think about Centurion, that's going to ramp up probably about 700,000 tons in Q1, about 1 million to 1.1 million in Q2 and Q3, and then it will fall back down in Q4 as we have a longwall move.

Very helpful, Mark. I appreciate that. And then maybe sticking with the seaborne met segment. I understand you guys now expect to realize approximately 80% of the benchmark there with the additional Centurion tons coming on. But could you maybe just give us a sense of kind of the quality breakdown there, like maybe a percentage selling at PLV index versus high-volatile versus PCI, et cetera?

So not -- really the only change year-over-year is Centurion. So think of all of those tons, 3.5 million tons selling at benchmark, full benchmark pricing, maybe even a small premium. And then the rest of that portfolio will be selling at what has historically done in that 70% range.

Okay. Perfect. And then just maybe one to end on shareholder returns. As you guys said, spend for Centurion kind of winding down here met prices have improved here in the near term. When do you expect to be able to begin generating enough available free cash flow in order to return to share buyback?

Yes. As Jim mentioned, it's our number 1 focus from a capital allocation perspective is shareholder returns. I think back on 2025 on the amount of dollars we invested to get Centurion online $250 million, $260 million last year alone. So we'll be down substantially at Centurion from a capital perspective, probably $150 million less going forward. We also had a lot of expenses related to the previously announced proposed transaction with Anglo.

So we're starting the year at about $230 million better -- and then we look at premium hard coking coal prices being at $250 right now, substantially better than prior years, particularly with Centurion coming online. So at today's prices, I think anyone could look at the guidance we provided and see some substantial free cash flow generation. And our policy remains the same to return that to shareholders. Jim mentioned, it's the number 1 priority with the Centurion development risk off the table, that return should be much closer to 100% versus 65% --

George Eadie, UBS.

So maybe first question for Malcolm. Can you -- just following up on the question before, can you help me what percent of prices in the PRB cost linked? I guess my question is if you're locking in contracts for late 2027 delivery at just under $17 a short tonne, which it looks like the futures is now at. If costs hold flat for those tonnes alone, can you essentially capture all that $5 a short tonne margin? Is that right and a good way to think about it?

Yes. George, it's a little difficult for me to get into the specifics of each of the contracts. But generally, we don't have a lot of rise and fall for costs within the PRB contracts. They rise and fall on the basis of government policy impositions, taxes, those types of things. So when pricing business, we've got to take a view of what costs are and what the market can bear out there. But we're not really a cost-plus business. We look at what we think the fair market level is out there, and we'll pitch that in that year's dollars effectively.

Okay. Then like in terms of taxes and so forth rebates, like how much does that sort of run out? Like is it fair to assume like 20% of that price upside gets taken away in those sort of factors? Or is it more about a give-and-take negotiation and those contracts prices aren't like exactly what you'll get?

Yes. Look, I think you got it about right. I mean if you go across our book, you could say royalties, taxes and the like could be 20%, 25%, something like that. So if you think about that, if prices go up, some of that gets taken away.

Yes. Okay. And maybe back to Jim and Mark, but just on volumes in Australia, Moorvale, when does that deplete exactly which quarter? And just on that, given a better '27, hopefully, for Coppabella, is sort of 1 million tonne down year-on-year net for that JV sort of the right way to think about it potentially?

George, first question on Morrvale, I think, was the question. We will be mining there all of this year and into 2023. We probably second half of the year will wind down at Morrvale, and it will really transition all the Coppabella. So looking for a little bit of decline year-over-year as the combined entity. But I would say we'll be done midyear at Morrvale.

Okay. And sorry, just on volumes as well there. Will, can you remind us where that's at operationally and CapEx? Is there anything sort of material to come back end of the decade with the sort of pit sequencing of that going on?

Yes. So it's really sustaining capital for the next two, three years. We talked about the pit kind of 8, 9, 10 extensions back end of the decade, probably 2029, where we'll see a slug of capital, and that will be fleet and equipment as well, maybe a total of $100 million that far out.

This concludes our question-and-answer session. I would like to turn the conference back over to Jim Grech for any closing remarks.

Well, thanks for your time today, both for our long-standing investors as well as the -- many of you have been new to the story in the recent months. I believe we have a great year ahead of us, and we're looking forward to keeping you updated as the year goes on. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.