Whitehaven Coal. China outlook drives impairments A$1.04 AUSTRALIA. Event. Impact. Earnings and target price revision.

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AUSTRALIA WHC AU Price (at 06:10, 13 Aug 2015 GMT) Neutral A$1.04 Valuation A$ - DCF (WACC 8.0%, beta 1.6, ERP 5.0%, RFR 3.8%) 1.18 12-month target A$ 1.15 12-month TSR % +10.6 Volatility Index High GICS sector Energy Market cap A$m 1,026 30-day avg turnover A$m 3.9 Number shares on issue m 986.6 Investment fundamentals Year end 30 Jun 2015A 2016E 2017E 2018E Revenue m 763.3 1,221.6 1,370.1 1,563.1 EBIT m 33.2 34.4 119.6 112.3 Reported profit m -339.9-0.3 62.5 60.1 Adjusted profit m -8.0-0.3 62.5 60.1 Gross cashflow m 89.6 129.2 191.4 203.6 CFPS 8.7 12.6 18.7 19.8 CFPS growth % 118.0 44.1 48.2 6.4 PGCFPS x 11.9 8.3 5.6 5.2 PGCFPS rel x 1.31 1.00 0.76 0.78 EPS adj -0.8 0.0 6.1 5.9 EPS adj growth % 79.3 96.0 nmf -3.8 PER adj x nmf nmf 17.1 17.8 PER rel x nmf nmf 1.44 1.69 Total DPS 0.0 0.0 0.0 0.0 Total div yield % 0.0 0.0 0.0 0.0 ROA % 0.8 0.8 2.9 2.8 ROE % -0.3 0.0 2.2 2.0 EV/EBITDA x 15.3 12.2 8.1 7.8 Net debt/equity % 32.7 31.4 26.0 22.2 P/BV x 0.4 0.4 0.4 0.4 WHC AU vs Small Ordinaries, & rec history Note: Recommendation timeline - if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, August 2015 (all figures in AUD unless noted) 13 August 2015 Macquarie Securities (Australia) Limited China outlook drives impairments Event WHC has reported FY15 underlying Ebitda and earnings in line with our expectation. Impairments of $332m after tax resulted in a reported loss for FY15 of $342.7m. Impact Underlying earnings in line. WHC reported revenue of $763.3m for FY15 within 1% of our expectation; operating Ebitda of $130.3m was also in line and net loss after tax but before significant items of $10.4m was broadly in line with our expectation of a modest $4m profit. Impairment of exploration and marginal assets. WHC applied a $354m impairment charge to exploration and its high ash, low energy development assets. The impairment charge has been driven by the recent decline in coal prices and the changing dynamics of the Chinese coal market which was the target for WHC s high ash, low energy resources. This is in addition to the $90m impairment of MRRT goodwill applied in 1HFY15. We are confident in WHC s operating credentials but...fy15 was a notable year of achievement for WHC delivering Maules Creek on time and under budget and driving sustainable cost reductions across the board. Costs will need to remain a focus, particularly at Narrabri with its expected ROM coal reduction in FY16 due to longwall change-outs. Delivering the expected ramp up in met coal products at Maules Creek will also be important. China is likely to continue to weigh on coal sentiment and pricing. We continue to see the outlook for coal as challenging and do not think this has been helped by China s recent devaluation of the Yuan. Although marginal supply is being curtailed, this is falling short of the massive fall in Chinese imports. Whilst we acknowledge that WHC s thermal products are high quality and are consumed in the premium Japanese and Korean markets, we believe that China will remain the key driver for coal sentiment and pricing. Earnings and target price revision Our earnings forecasts for WHC are essentially unchanged after incorporating the FY15 result. Rolling our valuation forward and WHC s slightly better than expected net debt add $0.03/sh to our valuation but we leave our target price unchanged at $1.15/sh. Price catalyst 12-month price target: A$1.15 based on a DCF methodology. Catalyst: WHC s September quarterly will be the next operational catalyst for the company, but we expect macro data and sentiment to be a more immediate driver of the stock price. Action and recommendation Upgrade to Neutral. Operationally, we see WHC as low-risk and believe the company will continue to deliver on production and costs. However, until coal prices recover, we believe the share price will remain under pressure. Please refer to page 5 for important disclosures and analyst certification, or on our website www.macquarie.com/research/disclosures.

FY15 financial result analysis Underlying earnings in line WHC reported revenue of $763.3m for FY15 within 1% of our expectation; operating Ebitda of $130.3m was also in line with our forecast $135m and loss after tax but before significant items of $10.4m was broadly in line with our expectation of a modest $4m profit. Fig 1 FH15 earnings were in line with our expectation Y/E June Actual Macq Variance Sales Revenue A$m 763.3 770-1% EBITDA A$m 130.3 135-3% Adjusted NPAT A$m (10.4) 4 nmf Net debt marginally better than forecast WHC reported net debt of $935.8m which was 5% better than our forecast. WHC reported an additional $300m of unutilised funds in its secured facility and with the practical completion of Maules Creek we do not expect WHC to have to draw substantially on this. However on our forecast we don t believe WHC will be able to make meaningful near-term inroads on debt repayments either. Under our assumption that WHC maintains a ~$100m minimum cash balance and pays no dividends, we do not forecast WHC moving to net cash until 2022. Fig 2 Net cash in 2022 1500 1000 500 0-500 -1000 2013a 2014a 2015e 2016e 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e Net Debt/(Cash) Gearing (net debt/equity) 40% 30% 20% 10% 0% -10% -20% -30% Impairment of exploration and marginal assets WHC applied a $354.6m impairment charge to exploration and high ash, low energy development assets. The impairment charge has been driven by the recent decline in coal prices and the changing dynamics of the Chinese coal market which was the target for WHC s high ash, low energy resources. This is in addition to the $90.7m impairment of MRRT goodwill applied in 1HFY15. Fig 3 Summary of WHC impairments Y/E June A$m Impairment of exploration and related assets (354.6) Impairment of MRRT goodwill (90.7) Write off of finance facility upfront costs (23.1) Appplicable tax benefit 138.4 Total (331.9) 13 August 2015 2

Coal resources increase In spite of the significant impairment of exploration and marginal resources, WHC reported a 4.7% increase in its coal resources which now stand at 4.037Bt. Coal reserves decreased slightly and marketable coal reserves fell 14% to 789Mt. We are confident in WHC s operating credentials but... FY15 was a notable year of achievement for WHC delivering Maules Creek on time and under budget and driving sustainable cost reductions across the board. WHC has a quality suite of assets and we believe that Maules Creek and Narrabri will continue to deliver operationally. Cost will need to remain a focus, particularly at Narrabri with its expected ROM coal reduction in FY16 due to longwall change-outs. Delivering the expected ramp up in met coal products at Maules Creek will also be important. Fig 4 Forecast WHC production and cost (WHC share) 20 18 16 14 12 10 8 6 4 2 0 2013a 2014a 2015a 2016e 2017e 2018e 2019e 2020e Gunnedah Werris Creek Narrabri Vickery Maules Creek FOB cost A$ Thermal coal spot price Unit cash cost 100 95 90 85 80 75 70 65 60 55 50 China likely to continue to weigh on coal sentiment and pricing We continue to see the outlook for coal as challenging and do not think this has been helped by China s recent devaluation of the Yuan. Along with recent protectionist moves within the Chinese coal sector, which have led to an annualised 50Mt decrease in seaborne thermal trade for 2015, we see further downside risk to pricing. Although marginal supply is being curtailed, this is falling short of the massive fall in Chinese imports. Whilst we acknowledge that WHC s thermal products are high quality and are consumed in the premium Japanese and Korean markets, we believe that China will remain the key driver for coal sentiment and pricing. Fig 5 Whilst supply has been curtailed... Fig 6 it has not bridged the demand gap Source: Customs data, Macquarie Research, August 2015 Source: Customs data, Macquarie Research, August 2015 13 August 2015 3

Fundamentals Macquarie Wealth Management Macquarie Quant View The quant model currently holds a strong negative view on Whitehaven Coal. The strongest style exposure is Earnings Momentum, indicating this stock has received earnings upgrades and is well liked by sell side analysts. The weakest style exposure is Price Momentum, indicating this stock has had weak medium to long term returns which often persist into the future. 449/619 Global rank in Energy % of BUY recommendations 38% (6/16) Number of Price Target downgrades 9 Number of Price Target upgrades 2 Attractive Quant Local market rank Global sector rank Displays where the company s ranked based on the fundamental consensus Price Target and Macquarie s Quantitative Alpha model. Two rankings: Local market (Australia & NZ) and Global sector (Energy) Macquarie Alpha Model ranking A list of comparable companies and their Macquarie Alpha model score (higher is better). Factors driving the Alpha Model For the comparable firms this chart shows the key underlying styles and their contribution to the current overall Alpha score. -0.2-1.4-1.4-1.5-3.0-2.0-1.0 0.0 1.0 2.0 3.0-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% Valuations Growth Profitability Earnings Momentum Price Momentum Quality Macquarie Earnings Sentiment Indicator The Macquarie Sentiment Indicator is an enhanced earnings revisions signal that favours analysts who have more timely and higher conviction revisions. Current score shown below. Drivers of Stock Return Breakdown of 1 year total return (local currency) into returns from dividends, changes in forward earnings estimates and the resulting change in earnings multiple. -0.9-0.9-0.4 0.5-3.0-2.0-1.0 0.0 1.0 2.0 3.0-100% -50% 0% 50% 100% Dividend Return Multiple Return Earnings Outlook 1Yr Total Return What drove this Company in the last 5 years Which factor score has had the greatest correlation with the company s returns over the last 5 years. IRR Dividend Disc. Model Dividend Cover Earnings Certainty Price to Cash FY1 Relative Turnover Momentum 3 Month DPS Revisions 3 Month Momentum 6 Month Negatives Positives -21% -15% -15% -16% 23% 20% 26% 25% -30% -20% -10% 0% 10% 20% 30% How it looks on the Alpha model A more granular view of the underlying style scores that drive the alpha (higher is better) and the percentile rank relative to the sector and market. Alpha Model Score Valuation Growth Profitability Earnings Momentum Price Momentum Quality Capital & Funding Liquidity Risk Technicals & Trading Normalized Score -1.49-0.63-0.30-0.65 0.20-1.24-0.55 0.09-1.34-1.15 0.16 Percentile relative to sector(/619) Percentile relative to market(/414) 0 50 100 0 50 100 0 0 1 1 Source (all charts): FactSet, Thomson Reuters, and Macquarie Research. For more details on the Macquarie Alpha model or for more customised analysis and screens, please contact the Macquarie Global Quantitative/Custom Products Group (cpg@macquarie.com) 13 August 2015 4

Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie First South - South Africa Outperform expected return >+10% Neutral expected return from -10% to +10% Underperform expected return <-10% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3000 index return Neutral (Hold) return within 5% of Russell 3000 index return Underperform (Sell) return >5% below Russell 3000 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down 60 100% in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 40 60% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 30 40% in a year. Low medium stock should be expected to move up or down at least 25 30% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Asia/Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 30 June 2015 AU/NZ Asia RSA USA CA EUR Outperform 46.23% 58.36% 47.27% 44.20% 60.65% 43.01% (for US coverage by MCUSA, 9.68% of stocks followed are investment banking clients) Neutral 37.67% 25.65% 29.09% 49.29% 34.19% 40.93% (for US coverage by MCUSA, 5.53% of stocks followed are investment banking clients) Underperform 16.10% 15.99% 23.64% 6.52% 5.16% 16.06% (for US coverage by MCUSA, 1.38% of stocks followed are investment banking clients) WHC AU vs Small Ordinaries, & rec history (all figures in AUD currency unless noted) Note: Recommendation timeline if not a continuous line, then there was no Macquarie coverage at the time or there was an embargo period. Source: FactSet, Macquarie Research, August 2015 12-month target price methodology WHC AU: A$1.15 based on a DCF methodology Company-specific disclosures: WHC AU: Macquarie and its affiliates collectively and beneficially own or control 1% or more of any class of Limited's equity securities. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures. Date Stock Code (BBG code) Recommendation Target Price 22-Jul-2015 WHC AU Underperform A$1.15 13-May-2015 WHC AU Underperform A$1.00 17-Mar-2015 WHC AU Neutral A$1.50 15-Jan-2015 WHC AU Neutral A$1.00 24-Sep-2014 WHC AU Neutral A$1.70 28-Aug-2014 WHC AU Neutral A$2.00 16-May-2014 WHC AU Outperform A$1.70 29-Jul-2013 WHC AU Outperform A$3.00 13-Jul-2013 WHC AU Outperform A$3.20 04-Jul-2013 WHC AU Outperform A$3.45 25-Apr-2013 WHC AU Outperform A$3.90 26-Oct-2012 WHC AU Outperform A$4.00 19-Sep-2012 WHC AU Outperform A$4.35 24-Aug-2012 WHC AU Outperform A$4.70 Target price risk disclosures: WHC AU: Any inability to compete successfully in their markets may harm the business. This could be a result of many factors which may include geographic mix and introduction of improved products or service offerings by competitors. The results of operations may be materially affected by global economic conditions generally, including conditions in financial markets. The company is exposed to market risks, such as changes in interest rates, foreign exchange rates and input prices. From time to time, the company will enter into transactions, including transactions in derivative instruments, to manage certain of these exposures. 13 August 2015 5

Analyst certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN 94 122 169 279, AFSL No. 318062) ( MGL ) and its related entities (the Macquarie Group ) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN 58 002 832 126, AFSL No. 238947) a Participant of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Equities Limited (ABN 41 002 574 923, AFSL No. 237504) ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited ( MENZ ) an NZX Firm. Macquarie Private Wealth s services in New Zealand are provided by MENZ. Macquarie Bank Limited (ABN 46 008 583 542, AFSL No. 237502) ( MBL ) is a company incorporated in Australia and authorised under the Banking Act 1959 (Australia) to conduct banking business in Australia. None of MBL, MGL or MENZ is registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act 1989. Any MGL subsidiary noted in this research, apart from MBL, is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Australia) and that subsidiary s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise. This research is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. This research has been prepared for the use of the clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient, you must not use or disclose this research in any way. If you received it in error, please tell us immediately by return e-mail and delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. This research is based on information obtained from sources believed to be reliable, but the Macquarie Group does not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. The Macquarie Group accepts no liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. The Macquarie Group produces a variety of research products, recommendations contained in one type of research product may differ from recommendations contained in other types of research. The Macquarie Group has established and implemented a conflicts policy at group level, which may be revised and updated from time to time, pursuant to regulatory requirements; which sets out how we must seek to identify and manage all material conflicts of interest. The Macquarie Group, its officers and employees may have conflicting roles in the financial products referred to in this research and, as such, may effect transactions which are not consistent with the recommendations (if any) in this research. The Macquarie Group may receive fees, brokerage or commissions for acting in those capacities and the reader should assume that this is the case. The Macquarie Group s employees or officers may provide oral or written opinions to its clients which are contrary to the opinions expressed in this research. Important disclosure information regarding the subject companies covered in this report is available at www.macquarie.com/disclosures. 13 August 2015 6