CEO's Statement

The continued strengthening of our operational strategies and implementation of improved cost savings is driving the next stage in the evolution of the Yancoal group.

Maximising blending opportunities and shared services, our operations have worked to meet our production targets under challenging conditions, overcoming production hurdles and adjusting run rates as required.

This flexibility to rapidly adapt to mining conditions has enabled our teams to improve operational efficiencies and reduce significant costs throughout the year.

It has also formed the foundation of our project team’s capabilities in managing the development of our high value Moolarben Stage Two asset, which will ultimately drive the future strength of our Yancoal product offerings.

Our continued focus on the delivery of the Moolarben asset demonstrates Yancoal’s ongoing commitment to investing within the local resources sector and providing greater opportunities for employment, contract services and community investment within the mid-west region of New South Wales.

2015 production was in accordance with market expectations and Yancoal targets, with improved fleet efficiencies, overburden management, coal handling and processing throughput helping offset production interruptions attributable to scheduled longwall moves and difficult geological conditions in the underground operations.

Steady production gains across operations supported the implementation of improved and sustainable cost controls while maximising yield recoveries and blending.

Under the regional operating model, sites continued to share systems and processes, while implementing specific training initiatives in support of the core principles of the “Yancoal Way” culture of safety, integrity, excellence, and innovation.

Subsequent to the end of the financial year and as announced 2 March 2016, we made the necessary decision to move the Donaldson operation, consisting of the Abel underground mine, to ‘care and maintenance’ in June 2016.

The move to care and maintenance is in response to ongoing global market challenges, with the operation to commence a series of feasibility studies to consider future options for the mine.

Under the terms of our new debt-funding agreement, effective 31 March 2016, Yancoal will cease to control the Austar, Ashton and Donaldson assets, but remain as the exclusive provider of mine management, marketing, infrastructure and other corporate support services under 10-year contracts.

As such, our new employing entity for all eastern region underground operations staff, Yancoal Mining Services, will be appointed to manage the mines to the same high standards we manage the Premier and Cameby Downs mines in Western Australia and Queensland respectively, on behalf our majority shareholder Yanzhou Coal Mining Company Limited.

With 2016 providing new opportunities for growth and operational efficiencies, we remain focused on preserving the safety of our people, implementing leading edge rehabilitation and providing our customers with the guarantee of  quality product and delivery.

The year ahead will be one of change and challenge, both of which we are robustly prepared for.

Reinhold Schmidt

Chief Executive Officer