New Hope Corporation is swimming in cash – which itself is generating income – after a significant uptick in quarterly underlying earnings.
It is also about to restart coal sales into China, as trade relations begin to thaw with Australia’s major export partner, and says its cash pile is also generating income for the company.
The coal miner told the Australian Securities Exchange on Monday it had posted underlying EBITDA of $448.1m in its April quarter – up 14.8 per cent on the previous quarter and 20.6 per cent on the same quarter last year.
Sales from its Bengalla coal operations in New South Wales were up 47 per cent on the previous quarter to 2.15 million tonnes (Mt), while the first coal was also recently produced at Malabar Resources’ Maxwell Mine, also in NSW, which New Hope has a 15 per cent interest in.
Production from that project fell outside the time frame of the report released on Monday, however.
New Hope said it was cashed up at the end of the quarter, with $827m in cash and cash equivalents after paying its interim and special dividends, which returned $348.8m to shareholders, and was “now earning material net interest income on its positive cash balances’’.
New Hope’s positive results come despite much weaker coal prices than at this time last year, with the company saying the average index price came in at $US191.8, down from $US311.7 for the same period last year and 48.1 per cent down on the January quarter “due to mild winter conditions in the Northern hemisphere and customers holding above average coal inventories’’.
“Market pricing stabilised in the quarter and high energy coals saw some gains in April, finishing with an average … monthly price of US$189.7.’’
Imports into key markets were expected to increase in coming months, New Hope told the ASX, with global supplies remaining tight.
“The outlook for the remainder of calendar year 2023 remains positive, with market forwards continuing to show a contango,’’ the company said.
“With import restrictions on Australian coal into China being lifted … we have refreshed our relationships into the Chinese market and completed our first sales which will be delivered in the next quarter.
“The robust demand from China of lower energy product has provided an outlet for a portion of our coal over the low season.’’
New Hope said it had also started site works at the New Acland Mine Stage 3 project in Queensland, after an internal review at the Department of Regional Development, Manufacturing and Water upheld the agency’s decision to grant the project an associated water licence.
New Hope noted that the Oakey Coal Action Alliance had in May launched a fresh legal challenge in the Land Court of Queensland against the approval, however the company was forging ahead with land clearing to allow production drilling to start.
“The coal handling and preparation plan (CHPP) refurbishment project is ongoing, preparing the plant for first coal washing during quarter one, financial year 2024,’’ New Hope said.
“Preparations are underway for major infrastructure works, including a train loadout facility, rail lines, roads, bridges and dams.’’
The company said two expressions of interest for the project’s infrastructure ramp up had been released to the market, and major infrastructure works were scheduled to be completed over two years at a cost of about $198m.
New Hope said its 80 per cent-owned Bengalla operation performed strongly after a dragline shutdown in December.
“The operation is on track for a strong second half of financial year 2023 as represented by the improvement in volumes this quarter,’’ the company said.
“With the improvements in volumes and forecast dry weather conditions for the remainder of the 2023 financial year, operational cash costs (excluding delivery costs and royalties) have reduced from what was reported in our half year results presentation.
“Bengalla continues to work on productivity improvements to ensure it remains one of the
lowest cost operations in the global seaborne thermal coal market.’’
New Hope shares closed on Monday 0.8 per cent higher at $5.15.