CLD
#Thank you, Jonathan.
Next question, please.
Yes, there's quite a few considerations before they ask to post collateral.
We're actively talking to our surety underwriters.
But to date there has been no pressure on our bonding currently.
So right now we have no collateral posted.
And again, we've been meeting regularly with the surety providers.
I think one thing I'd add to that is it's quite clear that surety providers do the work to look at the companies, and indeed the individual mines to actually get a good understanding of them and the risks that may or may not be taking on when they post surety.
So we're spending a lot of time making sure they understand where we are and where our mines are and our financial position.
And obviously we'll continue to do that, because it's a very big issue and a relevant issue at the moment.
I think it is important that they actually do do the work, to not just do a broad-brush approach to an industry.
They actually want to understand the assets that they're posting bonds against.
I'll look at <UNK> for that.
He's (laughter).
I think typically it's in the neighborhood of ---+
It was $0.79 of the $9.90.
Okay.
Yes.
Thank you.
We focus in a lot of different areas from making sure we have the right labor force out there, be one of the big buckets, our blasting costs, our component costs, and then our outside services cost.
We try to do as much of the work in-house with our own people as we can, not only from an actual cost perspective but a quality perspective because we like what we do.
So we focus in all the different areas.
And if there's not just one giant step change, you've got to try to do it all.
But against that you have the strip ratio continue to increase, the hold distance increase, and things like medical costs and everything, they go up.
So for every good thing we do, there's always ---+ you're always swimming against the tide, as it were.
One thing is clear, though, that Gary and his team is they ---+ there's no shortage of things to improve.
And every time we knock off one thing with continuous monitoring, or save things failing, then it gives them more time to find the next thing to improve.
And it's an awful lot of detail work in the operations every day, whether it's operation equipment well, maintaining it well, and moving the right dirt in the right place at the right time.
When you put all that together, it comes together as a good result.
Unfortunately, there's no one silver bullet.
Obviously the diesel costs are a big change and they're going for us at the moment.
But that's the biggest thing that swings, which is why we separate them out from the cost that we talk about with the 5% to 8% underlying inflation, which is what we've typically seen.
But the guys are doing a great job keeping it towards the bottom of that range at the moment.
And obviously for the quarter, shipping the tons just brings the per ton rate down in any given quarter.
Thank you, <UNK>.
Next question, please.
Well, I think <UNK>, there's a certain amount of utilities who'll burn our PRB 8800, 8400 and Spring Creek coal.
The amount of burn they have each year depends on, obviously, on demand, the competition from gas, whether it's from their own boilers or competing boilers.
So the amount they burn unfortunately is going up and down a lot more than it used to a few years ago.
So demand is driven by that.
And then you've got the utilities look at the amount of coal they get.
What we do, seems to do a decent job on costs, and we think we do.
The reality is in the Powder River Basin it's a very competitive basin, and I don't think we could ---+ it's not like you could cut your cost ---+ cut your prices by several dollars to grab lots of market share.
If you did, you'd have ---+ the other guys would have to follow you down.
So I think it's an over-supplied market.
We sell it at or around where the market is.
We don't have any market powers, as it were, and certainly wouldn't ---+ it's very, very competitive.
So the way anything good we do with cost comes through is just in the margin we can deliver when we're selling coal basically at the same price as everyone else.
And we'd like to see the prices higher, but it's very tough in a market where demand is being driven down by NGO and regulatory action, and obviously by competition from the gas.
That combination makes it pretty tough, and obviously in an over-supplied market than if prices go down to somebody's cost curve, and our margin is sort of at least it's slightly better because we've got the cost, maybe than some other players.
But it's not by ---+ it doesn't give us the ability to go and push them out of business.
That's not the way the basin works.
Thank you so much.
Next question, please.
<UNK>, you're a detail man, as always.
I'm not actually quite sure.
I'd say 50/50, maybe slightly more of Cordero, but not much in it.
Around about where we are at the moment.
It's pretty grim.
So yes, the Newcastle price is giving me the (inaudible) we it.
And the over-supply in the Asian markets with the China, it means that we're not far off it.
It depends.
We can sometimes get more dollars when we sell into specific customers in Japan and things.
But overall it's pretty close, and whether you get 65% or 70% of Newcastle makes a big difference.
But it's clearly a market where there's too much coal and production is being brought off.
But as with the domestic market, it takes time to happen.
Obviously we're suffering because of that Chinese reduction in supply and also the strong US dollar doesn't help us.
So it's about there, but we're ---+ that's why we're obviously talking to the rail and port guys about the best way to manage through this.
Yes.
What we have said is the core cash cost, and if you looked in our investor presentation we break this out also, is the total costs taking out royalty and taxes, because that's a function of the realized price, roughly 30%, and the fuel and lubes, which being a commodity it just was what it was.
So we pulled those two categories out.
The remaining is the core cash cost, and that is what annually inflates somewhere between 5% and 8%, but don't take any one quarter and work off that.
Yes, and the reason for is that's what we've seen over many years, and its most accurate answer we can give to people like yourselves when you're trying to get your mind around it.
It's a mixture of all the things we do.
So on the cost ---+ on the increases you've got the strip ratio, you got the hold distances, you've got increasing prices maybe for equipment, certainly labor and medical costs, people costs keep going up above inflation.
So you've got all those sorts of things adding up.
And then against that you have, this is the work that Gary and his team's try to do to manage the details of the operations to get the cost down.
So it's the mixture of those.
And overall it tends to come out 5% to 8%.
And if we can be closer to 5% for year or two, then I think Gary and his team are doing a very good job.
Thanks, <UNK>.
Next question, please.
Yes.
No, we talked about $0.50 per ton on 80 million tons of production capacity.
Be about $40 million would be the right, which is generally where we are at this year.
And we are managing that with a drive line move.
It is lumpy.
So if you look back in our investor deck there are periods where you have to introduce a truck-and-shovel fleet, and that can be very significant.
But right now at this point, it's really the sustaining capital to keep the fleet healthy.
Fairly significant ---+ I'm sorry, <UNK>.
The other thing on CapEx, we talk about the fleet, but we don't want to underestimate, I mean, the LBA payments, that's right in there with our CapEx.
And we made our final LBA payment in June.
That was $69 million, but that's a big milestone for Cloud Peak Energy.
We'd historically been paying on average about $90 million a year since our IPO for the bonus payments.
So to have that settled and be in a good reserve position, we don't anticipate having any need to bid on coal for many years.
Well, we'll see how it works out but we'll still be making sales as we go forward and looking at what we think is available out there.
We don't tie ourselves to anyone.
We like to be 100% sold.
We'd actually like to be a little bit over-sold and give ourselves here flexibility that comes with that.
But we'll take ---+ relative prices are very low, and obviously with low gas prices at the moment that's not helping things.
So we'll continue to bid to make sure we're comfortable with the range.
But we're about where we should be for this time of year.
And we'll continue to make some sales and update you in February when do our full-year results.
Next question.
Well I think ---+ thanks for the question.
I think we'll continue to focus on our liquidity, and obviously the actual outlook for going forward is quite uncertain at the moment.
It always strikes me that the debt's cheap for a reason.
It's because there is uncertainty.
Once we're confident enough to ---+ that things are picking up, I'm afraid the thing will ---+ the most obvious sign of that will actually be the debt will go up in value.
So I think for us to do it would actually be to ---+ would not be in line with what we say in terms of focusing on liquidity and the financial health of the business.
And we'll focus on that.
If for some reason we see an opportunity, we take it.
But I think at the moment job one, as I said before, is to do everything we can to keep our heads above water.
No.
Look, it's everything pulled together when you view how things are going forward.
So there's no one thing.
I must feel like Janet Yellen, I guess, wondering when to increase interest rates.
No, there's ---+ when things look good enough, we'll do it.
But at the moment, I'll have to say the outlook for coal is real tough.
And we're trying to manage through that.
But when things are improving, you give me a call and tell me.
We'll be all over it.
<UNK>, we absolutely have secured debt capacity.
We have both first lien and second lien.
But 2019, and we're talking December 2019, we've got a long time to see where the markets go and how things become available to us for refinancing.
Thanks, <UNK>.
Next question.
Okay.
Well, I'll say what we've always said over the years, and it large surface mines, maybe in the Western United States, maybe up into Canada look more like what we operate at the moment.
And we're happy to look at anything.
But it's whilst things are very distressed, it is also hard not only to come up financing but also to meet a buyer's expectation of value.
That's both on the way down, on the way up in markets.
That tends to be the reality.
So at the moment there are things to look at.
We've actually looked at them, but we've tended to stop reasonably quickly, and one of the reasons just is that the ability to do things when market, financial markets, are so [tough to call], it does restrict your ability to do things quite differently from when there's lots of money flowing around.
At the moment it's important to hang onto to what you've got and do the best can with it.
So that's where we are at.
Okay.
Well, look, thank you very much for taking the time to listen into our call.
Obviously domestic and international coal markets continue to be tough.
I have been very impressed by the way our operations have been able to manage their costs so far this year.
And we are learning how to cope with significant swings in production from quarter to quarter, as coal consumption varies.
We'll continue to focus on managing our business, our export exposure.
As I say, we'll update you as soon as there's something to update you on.
And we'll look forward to talking to you in February with our full-year results.
Thank you very much for your time, once again.
We'll speak to you in February.
