#1YANCOAL YANCOAL AUSTRALIA LTD ADDRESS: Level 18, Tower 2, 201 Sussex Street, Sydney NSW 2000 PHONE: 61 2 8583 5300 FAX: 兖煤澳大利亚有限公司 WEBSITE: 61 2 8583 5399 www.yancoal.com.au 26 February 2021 ASX Release: 2020 Full-year Financial Result Presentation For personal use only Authorised for lodgement by the Yancoal Disclosure Committee Investor Relations Contact: Brendan Fitzpatrick, GM Investor Relations Email: Brendan. [email protected] Additional information about the company can be found at www.yancoal.com.au YANCOAL AUSTRALIA LTD - ASX RELEASE |1#2or personal use only Yancoal Australia Ltd 2020 Full-year Financial Result 26 February 2021 G YANCOAL 兖煤澳大利亚有限公司#3For personal use only 2 Important Notice and Disclaimer Acceptance - This presentation is issued by Yancoal Australia Limited ABN 82 111 859 119 ("Yancoal"). By accepting, accessing or reviewing this presentation, you acknowledge and agree to the terms set out in this Important Notice and Disclaimer. Summary of information - This presentation has been provided to you solely to convey information about Yancoal and its related entities, and their activities, for the year ended 31 December 2020. The information in this presentation is general in nature and does not purport to be complete, nor does it contain all the information which a prospective investor may require in evaluating a possible investment in Yancoal. It has been prepared by Yancoal with due care, but other than as required by law, no representation or warranty, express or implied, is provided in relation to the accuracy, correctness, fairness or completeness of the information. Statements in this presentation are made only as of the date of this presentation, unless otherwise stated, and the information in this presentation remains subject to change without notice. None of Yancoal, its representatives or advisers is responsible for updating or revising, or undertakes to update or revise, this presentation. Items depicted in photographs and diagrams are not assets of Yancoal, unless stated. This presentation should be read in conjunction with Yancoal's Full Year Result for the period ended 31 December 2020 and other periodic and continuous disclosure information, lodged with the ASX and HKEX, which are available at www.asx.com.au and www.hkex.com.hk. Industry data - Certain market and industry data cited or used in the preparation of this presentation may have been obtained from research, surveys or studies conducted by third parties, including industry or general publications. None of Yancoal, its representatives or advisers have independently verified any such market or industry data provided by third parties or industry or general publications, nor have those third parties or industry or general publications authorised or approved the publication of this presentation. Not financial product advice or offer - This presentation is for information purposes only and is not a prospectus, product disclosure statement, pathfinder document for the purposes of section 734(9) of the Corporations Act or other disclosure document under Australian law, Hong Kong law or the law of any other jurisdiction. It is not, and should not be considered as, an offer, invitation, solicitation, advice or recommendation to buy or sell or to refrain from buying or selling any securities or other investment product or entering into any other transaction in any jurisdiction. It has been prepared without taking into account the objectives, financial or tax situation or needs of individuals. Readers should consider the appropriateness of the information having regard to their own objectives, financial and tax situation and needs, make their own enquiries and investigations regarding all information in this presentation including but not limited to the assumptions, uncertainties and contingencies which may affect future operations of Yancoal and the impact that different future outcomes may have on Yancoal, and seek legal and taxation advice appropriate for their jurisdiction. Distribution - The release, publication or distribution of this presentation (including an electronic copy) outside Australia, New Zealand and Hong Kong may be restricted by law. If you come into possession of this presentation, you should observe such restrictions and should seek your own advice on such restrictions. Any non-compliance with these restrictions may contravene applicable securities laws. Financial Data - Investors should note that this presentation contains pro forma historical and forecast financial information. The pro forma and forecast financial information, and the historical information, provided in this presentation is for illustrative purposes only and is not represented as being indicative of Yancoal's views on its future financial condition and/or performance. Investors should note that Watagan Mining Company Pty Ltd ("Watagan") (which owns the Ashton, Austar and Donaldson mines) was wholly- owned but not controlled by Yancoal under applicable accounting standards, and not consolidated by Yancoal from 31 March 2016 up to and including 16 December 2020; Yancoal deconsolidated the financial results of Watagan as a subsidiary from its consolidated financial statements during this period. Investors should be aware that certain financial measures included in this presentation are 'non-IFRS financial information' under ASIC Regulatory Guide 230: 'Disclosing non-IFRS financial information' published by ASIC, and are not recognised under Australian Accounting Standards (AAS) and International Financial Reporting Standards (IFRS). The non-IFRS financial information/non- GAAP financial measures include EBITDA, net debt and others. Such non-IFRS financial information/non-GAAP financial measures do not have a standardised meaning prescribed by AAS or IFRS. Therefore, the non-IFRS financial information may not be comparable to similarly titled measures presented by other entities, and should not be construed as an alternative to other financial measures determined in accordance with AAS or IFRS. Although Yancoal believes these non-IFRS financial measures provide useful information to investors in measuring the financial performance and condition of its business, investors are cautioned not to place undue reliance on any non-IFRS financial information/non-GAAP financial measures included in this presentation. Effect of rounding - A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation. Use of currency - All financial numbers presented are stated in Australian dollars (A$ or $) unless otherwise stated. YANCOAL 充煤澳大利亚有限公司#4For personal use only 3 Important Notice and Disclaimer (Continued) Reserves and Resources Reporting - In this presentation, references to mineral resources ("Resources") and ore reserves ("Reserves") for Yancoal are compliant with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 ("JORC Code") and are measured in accordance with the JORC Code. The information in this Presentation that relates to Resources and Reserves has been previously disclosed to the market in the Coal Resources and Coal Reserves statement for the year ending 31 December 2019 dated 28 February 2020 (Resources and Reserves Statement) and is sourced from the information prepared and compiled by Competent Persons (as defined by the JORC Code), as disclosed and detailed in the Resources and Reserves Statement. Reserves and Resources for these mines are as at 31 December 2019. The information related to the Resources and Reserves have been prepared and compiled by persons who have the required qualifications and experience to qualify as Competent Persons (as that term is defined in the JORC Code). Yancoal is unaware of any new information or data that materially affects the information contained in the Resources and Reserves Statement. All material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed at the time of this presentation. References to Resources and Reserves for other assets, companies, countries, regions and basins are sourced from third parties and measured in accordance with their source data. Information in this presentation relating to Yancoal's Resources and Reserves is extracted from information previously published by Yancoal and is available on the Yancoal and ASX website at www.yancoal.com.au and www.asx.com.au. Past performance - Past performance, including past share price performance of Yancoal and pro forma financial information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of Yancoal's views on its future financial performance or condition. Past performance of Yancoal cannot be relied upon as an indicator of (and provides no guidance as to) future Yancoal performance. Nothing contained in this presentation nor any information made available to you is, or shall be relied upon as, a promise, representation, warranty or guarantee, whether as to the past, present or future. Future performance and forward-looking statements - This presentation contains forward-looking statements, forecasts, estimates, projections, beliefs and opinions ("Forward- Looking Statements"). Forward-Looking Statements can be identified by the use of terminology, including, without limitation, the terms 'believes', 'estimates', 'anticipates', 'expects', 'projects', 'predicts', 'intends', 'plans', 'propose', 'goals', 'targets', 'aims', 'outlook', 'guidance', 'forecasts', 'may', 'will', 'would', 'could' or 'should' or, in each case, their negative or other variations or comparable terminology. Forward-Looking Statements reflect expectations as at the date of this presentation, however they are not guarantees or predictions of future performance or events or statements of fact. They involve known and unknown risks, uncertainties and other factors, many of which are beyond Yancoal's control, and which may cause actual results to differ materially from anticipated results, performance or achievements expressed or implied by the Forward-Looking Statements contained in this presentation. Other than as required by law, although they believe there is a reasonable basis for the Forward-Looking Statements, neither Yancoal nor any other person (including any director, officer or employee of Yancoal or any related body corporate) gives any representation, assurance or guarantee (express or implied) as to the accuracy, correctness or completeness of each Forward-Looking Statement or that the occurrence of any event, results, performance or achievement will actually occur. Except as required by applicable laws or regulations, Yancoal does not undertake to publicly update, revise or review any Forward-Looking Statements, whether as a result of new information or future events. Past performance cannot be relied on as a guide to future performance. No liability - This document has been prepared on the basis of information available to Yancoal. To the maximum extent permitted by law, Yancoal (including its subsidiaries, related bodies corporate, shareholders, affiliates, advisers and agents): ▪disclaims any obligations or undertaking to release any updates or revisions to the information to reflect any change in expectations or assumptions; ▪does not make any representation or warranty, express or implied, as to the accuracy, reliability, fairness, completeness of such information or opinions or that it contains all material information about Yancoal or which a prospective investor or purchaser may require in evaluating a possible investment in Yancoal or acquisition of shares, or likelihood of fulfilment of any Forward-Looking Statement or any event or results expressed or implied in any Forward-Looking Statement; and ▪disclaims all responsibility and liability arising out of fault or negligence for any loss arising from the use of information contained in this presentation, regarding Forward- Looking Statements or any information, statements, opinions or matters, express or implied, contained in, arising out of or derived from, or for omissions from, this presentation. The data and information provided by Wood Mackenzie should not be interpreted as advice and you should not rely on it for any purpose. You may not copy or use this data and information except as expressly permitted by Wood Mackenzie in writing. To the fullest extent permitted by law, Wood Mackenzie accepts no responsibility for your use of this data and information except as specified in a written agreement you have entered into with Wood Mackenzie for the provision of such of such data and information. The data and information provided by GlobalCOAL may not be copied or used except as expressly permitted by GlobalCOAL in writing. The data and information provided by Platts may not be copied or used except as expressly permitted by Platts in writing. The data and information provided by Argus/McCloskey may not be copied or used except as expressly permitted by Argus/McCloskey in writing. YANCOAL 充煤澳大利亚有限公司#5For personal use only 4 Robust performance through cyclical lows and COVID-19 Effective COVID-19 response and Sustained safety performance 7.4 TRIFR $3.47 billion Revenue 38.3Mt Attributable Saleable Production $748 million Operating EBITDA & operating margin of 21% A$59/tonne Operating Cash Cost Operating cash flow of $605 million Additional 10% stake in Moolarben acquired 2021 guidance builds on the 2020 performance YANCOAL 充煤澳大利亚有限公司#6For personal use only 5 2 Safety Performance YAL SITES 12-mth Rolling TRIFR & LTIFR 12 Month Rolling TRIFR 12 Month Rolling LTIFR 12 10 6 8 . ......... Weighted Industry Benchmark TRIFR Rapid and successful implementation of a COVID response plan. . NO COVID cases or Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 significant operational affect at the mines. ⚫ Met the additional . challenges and kept key safety stats below our industry benchmark. Ongoing focus resulted in a better than industry benchmark performance 0 TRIFR = Total Recordable Injury Frequency rate, and LTIFR = Lost Time Injury Frequency Rate. Both exclude data from Hunter Valley Operations, Middlemount and Watagan assets (Austar, Ashton and Donaldson). The weighted industry average combines NSW open-cut, NSW underground and Queensland open-cut data. YANCOAL 充煤澳大利亚有限公司#7Controllable and Uncontrollable factors Operating factors 2020 2019 Change Average realised sales price (A$/t) 111 82 -26% Observations Set by market conditions Attributable production 35.6 38.3 +8% Increased Moolarben stake (million tonnes) Attributable sales 35.6 37.9 +6% No sales volume disruption (million tonnes) Operating cash costs 64 59 -8% Optimisation and deferrals (A$/t) * For personal use only LIEBHERR 11111 Moolarben's underground and open-cut mines produced a record 19.7 million tonnes of saleable coal in 2020 6 Operating cost costs revised to include other operating expenses. Prior period figures have been similarly adjusted. YANCOAL 充煤澳大利亚有限公司#8Average realised thermal coal price of A$76/t was down 24% from 2019 as lower economic activity affected demand for thermal coal. Thermal benchmarks (US$/t), YAL Average thermal coal sale price (US$/t)* 120 Average realised met. coal price of A$124/t was down 26% from 2019 as low-grade met. coal prices declined due to reduced steel making activity. Met. coal benchmarks (US$/t) & YAL Average met. coal sale price (US$/t)* 150 Coal market conditions 100 80 0000000000000 60 00000000000000 For personal use only. 40 000000 -Jul-20 125 100 Oct-20 75 50 25 Platts Low Vol PCI FOB Aust., US$/t Platts Semi-Soft FOB Aust., US$/t YAL Average met. coal sale price, US$/t ° Apr-19 $/t Jan-19 Source: Platts Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Index prices now benefiting from supply restructure and improved demand GlobalCoal NEWC 6,000kCal, US$/t 20 Argus McCloskey API5 5,500kCal, US$/t YAL Average thermal coal sale price, US$/t Jan-20 Apr-20 7 Average sale price is the average price in AUD term for each half-year period converted to USD terms at the average AUD:USD exchange for the period $/t Jan-19 Apr-19 Jul-19 Oct-19 Source: Argus/McCloskey, GlobalCOAL YANCOAL 充煤澳大利亚有限公司#9Customer base and product mix ⚫ Diverse customer base limits the impact from disruption from any one market. 2020 Product mix was 89% thermal coal with some PCI and semi-soft coking coal. Thermal coal price achieved Yancoal 2020 Sales volumes by country of final destination* (%) For personal use only. 8 2020 2019 % Change A$/t 76 100 -24% Metallurgical coal A$/t 124 167 -26% price achieved Combined coal A$/t 82 111 -26% price achieved Attributable sales volume ** (Million tonnes) Other / unkown ■ Thermal ■ Metallurgical 40 12% China 24% South East Asia 11% India 7% Thailand 8% Taiwan, Republic of China South Korea 7% 14% Japan 17% 2112505 35 4.2 5.5 5.1 30 3.8 33.7 28.4 30.1 3.3 15.5 8.8 0 2016 2017 2018 2019 2020 The proportion of revenue from any one country is usually less than 25% * Final destination is an internal assessment determined by Yancoal. This differs from the segment reporting provided in Note B2 to the Annual Financial Report. Excludes purchased coal tonnage. Excludes Middlemount (equity-accounted) and Watagan (equity-accounted from 31 March 2016 up to and including 16 December 2020). YANCOAL 充煤澳大利亚有限公司#10For personal use only 9 Coal Production Attributable Saleable Production by Asset * (Million tonnes) ■ HVO ■Stratford Duralie Watagan ■Moolarben ■MTW ■ Yarrabee > Non-attributable 60 60 50 40 40 30 52.1 51.8 50.0 38.3 35.6 32.9 31.5 19.8 20 20 18.5 12.0 10 Delivered on 2020 guidance of ~38Mt of attributable saleable coal production. The 8% increase in attributable saleable coal includes the benefit of the additional 10% stake in Moolarben. Large-scale, low-cost and long-life mines underpin performance : Moolarben, Mount Thorley Warkworth (MTW), 0 2016 2017 2018 2019 2020 Hunter Valley Operations (HVO). Large-scale, low-cost mines represent about 90% of attributable production *Attributable figures include: Mount Thorley Warkworth (82.9%); Hunter Valley Operations (51%); Stratford Duralie (100%), Yarrabee (100%) and Moolarben (81% - up to and including 30 November 2018, then 85% up to and including 31 December 2019, then 95% thereafter). Note the economic benefit from Moolarben increased from 85% to 95% from 1 April 2020 onwards, with the 3 month difference captured in the transaction terms. Watagan contribution changes from equity accounted to attributable from 17 December 2020 onwards. YANCOAL 充煤澳大利亚有限公司#11For personal use only 10 Unit costs beat the 2020 guidance Cash operating costs (per production tonne) (A$/tonne) ■Cash operating costs ■Royalty Implied operating cash margin 150 100 50 60 9 57 39 38 17 65 66 65 64 59 0 2016 2017 2018 2019 2020 ⚫A$59/t Cash operating costs, -8% YoY, and below the original target of A$63/t set 12 months ago.* * 2020 Unit costs had the temporary benefit of lower diesel costs and deferred costs associated with our COVID-19 response. © 2021 costs will include the Ashton underground mine which was previously equity accounted. ⚫ All these factors contribute to an increased unit cost forecast in 2021. Disciplined cost management delivered a better than targeted outcome Operating cash costs include mining, processing, and logistics charges to the port, it excludes royalties. The 2020 guidance and past periods have been restated to include other operating expenses. All reported figures are on a consistent basis. YANCOAL 充煤澳大利亚有限公司#12Financial Summary - Price impact cascades through Income Statement ($ millions) Revenue 2019 2020 Change Observations 4,459 3,473 -22% Correlated to realised sales price Operating EBITDA Lower revenue directly 1,654 748 -55% Depreciation and amortisation (607) (804) 32% impacts the EBITDA Increased output and Operating EBIT Moolarben revaluation Combines the revenue and 1,047 (56) -105% depreciation affects Net Profit/ (Loss) after Tax 719 (1,040) -249% Includes one-off, non-cash, non-operating items for personal use only ப 11 Mining and rehabilitation work continue through the coal price cycle at all our assets YANCOAL 充煤澳大利亚有限公司#13For personal use only 12 Price, Revenue and EBITDA Revenue and Average realised price (A$ Million) | (A$/tonne) 7,000 EBITDA and Margin (A$ Million) | (%) Operating EBITDA Revenue Average selling price, A$/t 140 3,000 132 6,000 114 5,000 80 4,000 3,000 2,601 2,000 1,238 1,000 45% EBITDA Margin 120 111 2,500 38% 36% 2,180 100 2,000 4,850 4,459 82 60 80 3,473 2016 2017 2018 2019 2020 1,500 60 40 1,654 21% 988 1,000 14% 748 20 500 20 172 2016 2017 2018 2019 2020 The business is more robust than during the last coal price cycle YANCOAL 充煤澳大利亚有限公司#14Operating EBITDA Drivers 2019 to 2020 drivers of the change in Operating EBITDA (A$ million) 1,800 1,654 ! 1,600 1,400 1,200 1,000 For personal use only 13 I External factors 800 I I 47 I 600 I (1,015) 400 200 I 142 (45) T Lower unit I costs, but I higher output i I resulted in I I higher costs on ! 748 (35) I I an absolute I basis I I I + T !Price and Royalty Sales volume Equity accounted items 2019 Operating EBITDA Foreign exchange 1 Operating costs 2020 Operating EBITDA The lower coal price was the most significant factor YANCOAL 充煤澳大利亚有限公司#15For personal use only 14 2020 Loss After Tax has non-operating items Profit (Loss) after tax (A$ Million) ■Profit/ (Loss) after tax 1,000 500 (500) (227) (1,000) 229 852 719 (1,040) ⚫ Reported Loss includes two sizable non-cash, non-operating items; a $653 million gain on the Moolarben revaluation in 1H20 and $1,383 million accounting loss on the Watagan reconsolidation in the second half. ⚫ These are one-off items. Accounting treatments do not reflect any long-term structural changes. in Yancoal's outlook for the coal industry or markets. (1,500) 2016 2017 2018 2019 2020 The 2020 reported loss includes one-off, non-cash, non-operating items YANCOAL 充煤澳大利亚有限公司#16For personal use only Fiscal position affected but not compromised Cashflow and Balance Sheet 2019 2020 Change Operating cash flow ($ million) 1,548 605 -61% Cash at end of period 962 637 -34% ($ million) Gearing ratio 29% 41% (%) * Leverage ratio (x)' ** 1.5 4.8 Yancoal continually invests in its assets and infrastructure Gearing calculated as the ratio of Net Debt to Net Debt plus Equity 15 ** Leverage ratio calculated as the ratio of Net Debt to Operating EBITDA Observations Cash flow still sound After Moolarben stake and 2019 Final dividend Post Watagan reconsolidation Change in the Operating EBITDA the main factor YANCOAL 充煤澳大利亚有限公司#17For personal use only 16 Operating Cash flow Operating Cash flow (A$ Million) 2,000 1,500 1,000 ■Operating cash flow 1,747 1,548 605 $3.0bn in payments to suppliers and employees in 2020 was similar to 2019. The $900 million reduction in revenue is reflected in the Operating Cash flow ⚫At 31 December 2020 the 'cash and cash equivalents' balance was $637 million after completing the $280 million dividend payment in April and purchasing the additional 10% stake in Moolarben - $300 million total price with $200 million paid during 2020. 500 408 (500) (24) 2016 2017 2018 2019 2020 The business is fundamentally sound throughout the coal price cycle YANCOAL 充煤澳大利亚有限公司#18For personal use only Debt and Distributions Annual Net Debt* and Gearing Ratio** (A$ Million) | (%) ■Net debt, A$ mn ◇ Gearing ratio, % 5,000 4,761 4,516 78% 4,500 4,000 3,500 3,093 3,000 47% 2,500 2,000 1,500 1,000 500 3,568 2,536 41% 35% 29% 2016 2017 2018 2019 2020 Debt and gearing levels now include Watagan components that were previously held off-balance sheet. A US$1.275 billion debt facility that had repayments due in 2020 and 2021 was replaced mid-year. $924 million was returned to shareholders over the past two years. The decision not to pay a dividend for 2020 was prudent given coal markets and coal prices. Financial flexibility utilised in response to lower coal prices * Net debt does not include debt and earnings associated with Watagan arrangements between 2016 and 2019. 17 ** Gearing calculated as the ratio of Net Debt to Net Debt plus Equity YANCOAL 充煤澳大利亚有限公司#19Guidance for 2021 Guidance component Attributable saleable coal production Original 2020 Guidance 2020 Outcome 2021 Guidance Around 38 million tonnes 38.3 million tonnes Around 39 million tonnes Attributable cash operating cost Around $63/tonne $59/tonne $60 to 62/tonne (excl. government royalties) * For personal use only 18 Attributable capital expenditure $380 million $279 million $360 to 380 million ** Yancoal's portfolio of low-cost mines is viable throughout the coal price cycle. The management team remains focused on the controllable aspects of our business and maximising the operational performance every year. * 2020 Attributable cash operating cost guidance restated to include other operating expenses; this figure is consistent with the reported outcome and the 2021 guidance. Capital expenditure guidance revised down twice during 2020. YANCOAL 充煤澳大利亚有限公司#20For personal use only 19 The case for investment Three low cost, large-scale assets underpin the business, especially during cyclical downturns Diverse customer base continues to demonstrate appetite for Yancoal product Asset reinvestment and shareholder returns are a priority Debt optimisation and reduction is an ongoing focus Capturing further value-add growth opportunities remains a key objective YANCOAL 充煤澳大利亚有限公司