NEW HOPE BOSS LOOKS AT CHEAP COAL ASSETS
Miner New Hope's CEO has rejected suggestions that the coal industry's decline is permanent and says he wants to make acquisitions this year.
Armed with a $1.1 billion war chest, New Hope boss Shane Stephan said he was well placed to ramp up purchases of coal assets that highly indebted miners could not afford to keep.
His comments came as the Queensland thermal coal producer overcame depressed prices to increase underlying first half net profit by 51 per cent from a year ago to $34.2 million.
However New Hope posted a statutory net loss of $23.1 million due to $58.5 million in writedowns of its oil, gas and other assets.
The slump in coal prices since 2011's record highs have led to thousands of Australian job losses, mine closures and hits to the Federal budget, with coal a major export.
While historically the industry is cyclical, the move by China's biggest coal giant Shenhua this week to forecast a 10 per cent fall in annual sales as China changes its energy mix has increased speculation that the downturn is a new normal.
Mr Stephan disagreed, saying China's efforts to clean up the environment were increasing demand for higher quality Australian thermal coal rather than from dirtier Chinese mines.
"People were saying in the late 1990s-early 2000s that coal was part of the old economy and didn't have a future ... the subsequent increase in energy demand during the 2000s proved that wrong," he told AAP.
"Around the peak of the cycle in 2010-11 they said that was going to be the new normal ... they have subsequently been proved wrong."
The company spent about $50 million on coal tenements in Queensland's Surat Basin last December, and Mr Stephan said coal companies with high debt from high-priced acquisitions made in 2010-11 would sell assets.
New Hope is financially backed by major shareholder the wealthy Millner family.
Mr Stephan said the miner's profit boost came from a six per cent rise in coal sales to a record 3.1 million tonnes, falls in the Australian dollar and a 35 per cent fall in diesel costs offsetting weak prices.
New Hope shares gained five cents to $2.53 by 1500 AEDT.
NEW HOPE BATTLES WEAK COMMODITY PRICES
* First half net loss of $23.1m, down from a $22.7m net profit
* Underlying net profit - excluding non-regular items - of $34.2 million, up 51 pct from $22.7 million
* However it said net profit excluding those items was up 51 per cent
* Revenue of $269.1m, down 5.6 pct, from $284.9m
* Fully-franked interim dividend of four cents a share, down from six cents a share.
courtesy of the Bull(.com.au)
bold plans if continuing to buy coal assets in QLD ,
there will be plenty of sales , but wouldn't improving/increasing related infrastructure be better (they have solids to liquids tech . and access to CSG tech in the "tool-kit" )
even tick of the Greenies with a "clean coal" power station .
time will tell i suppose .
New Hope Corporation Limited (ASX:NHC) (the Company) announces an update regarding recent
developments in the Group.
Malabar Resources Equity Investment
The Company, through a wholly owned subsidiary, has acquired a 15% interest in Malabar
Resources Limited (Malabar) for a total investment of $94.4 million.
Malabar is an unlisted public company whose flagship asset is the Maxwell Mine, an underground
metallurgical coal project located 10kms south-west of Muswellbrook in the Hunter Valley.
Construction of the project commenced in May 2022.
The Company’s investment in Malabar:
• aligns with the Company’s strategy to invest its surplus cash into coal assets that are low on the
cost curve with long life approvals;
• adds meaningful equity tonnes at an attractive entry price investing alongside well respected
founders who have a strong track record of developing coal projects and companies;
• diversifies the Company’s asset base by providing exposure to metallurgical coal mined by low
impact, underground methods;
• facilitates delivery of a project with strong technical and operational foundations and the ability
to unlock value with the use of significant established infrastructure; and
• provides attractive investment returns over the life of the project with additional upside return
opportunities from diversified enterprises including exploration and agricultural assets and the
future development of an approved 25MW solar farm.
The Company’s investment in Malabar Resources was pursuant to an equity raising conducted by
Malabar Resources in which the Company acquired 75,530,455 ordinary shares at $1.25 per share
funded from existing cash. Malabar Resources’ equity raising closed over-subscribed, with total
equity capital raised of $250 million. The equity raised by Malabar, together with existing cash of
$22 million, a $165 million senior debt facility and $75 million pre-payment facility provides Malabar
with more than $500million to fully fund the development of the Maxwell Mine.
Mining leases for the Maxwell Mine were granted in November 2021 and the project has received
final state and federal approvals. The Maxwell Mine has an estimated life of 25+ years with more
than 75% of the product suitable for steel making. Proved and probable reserves total 144 million
Maxwell Mine will be developed in stages with bord and pillar mining and long wall development
targeting 3.0 to 3.6Mtpa over an initial four year period followed by long wall expansion increasing
forecast coal sales to 5.5 to 6.5Mtpa over the life of the project.
Development of the Maxwell Mine is substantially de-risked and capex is reduced by Malabar’s
ownership of existing surface infrastructure acquired from previous owners in 2018, with a
replacement value exceeding $300 million. Production costs are projected to be within the lowest
quartile for similar seaborne traded products.
Malabar’s assets also include:
• Approved 25MW Maxwell Solar Farm (Stage One) located on more than 105 hectares of
rehabilitated mine land within the NSW Government’s designated Hunter-Central Coast
Renewable Energy Zone and with close proximity to high voltage network infrastructure, with
the capacity to significantly increase large-scale solar generation and battery storage;
• Spur Hill exploration project (EL 7429); and
• Agricultural assets including the Merton Vineyard.
Malabar’s strategy is to deliver low-impact underground mines which target metallurgical products,
while co-existing and facilitating substantial sustainable, renewable enterprises.
Bengalla Exploration Licence Granted
The New South Wales Government has granted Bengalla Mining Company an Exploration Licence
(ELA 6263) for an area of 556 hectares adjoining the western side of the Bengalla Mine.
Bengalla is the Group’s cornerstone asset in which the Company has an 80% interest. Bengalla’s
mining operations are approved to produce up to 15.0Mtpa ROM coal until 2039. Production is
planned to increase from 12.6Mtpa to 13.4Mtpa over the next two years in response to sustained,
strong demand for high quality, high energy thermal coal.
Bengalla will conduct an exploration program over the area of ELA 6263 aiming to identify available
economic resource to enhance production from Bengalla.
The grant reflects the New South Wales Government’s support for the mining industry as an
important contributor to NSW regional employment and economic development and as NSW’s
largest source of export income.
1 Prepared in accordance with the JORC Code (2012 edition).
For more information please contact:
• Robert Bishop, Chief Executive Officer;
• Rebecca Rinaldi, Chief Financial Officer; or
• Dominic O’Brien, Executive General Manager & Company Secretary.
P: +61 7 3418 0500 E: firstname.lastname@example.org
This ASX announcement was approved and authorised by the Board.
Termination of Undrawn Debt Facility
Following full repayment of the Group’s amortising secured loan facility (Debt Facility) from
operational cash flows as reported in the 31 October 2021 Quarterly Activities Report, the
Company has elected to terminate the undrawn Debt Facility prior to its maturity in November
Based on current cash balance and projected cash flows up to the period of maturity, there is no
reasonably foreseeable scenario in which the Group would require Debt Facility funding for general
The Credit Support facility has not been terminated and continues to be utilised by the Company,
mainly in relation to mining rehabilitation obligations at Bengalla.
The cancellation of the Debt Facility achieves cost savings and is a step forward in the execution of
a broader capital strategy seeking to maximise long-term investor value and alignment to overall
Operational Performance Update
While recent wet weather events have disrupted the operations at Bengalla, and the Hunter Valley
logistics chain that supports it, impacts have been partially offset by the further strengthening of
the coal price. During the weather event, conditions permitted Bengalla to undertake controlled
water discharges in accordance with existing approvals providing risk mitigation against future
The past few months have seen heightened focus on maintaining energy security as a core
component of navigating a just transition to a decarbonised economy. This has supported thermal
coal pricing over the second half of the year and we expect pricing to remain at historically high
levels for the short to medium term. To support the demand for domestic energy, Bengalla has also
been able to sell more coal into the domestic market in addition to existing contracted domestic
supply while the Hunter Valley logistics chain has been disrupted by wet weather.
Overall, the Company looks forward to providing further operational and financial information in the
Quarterly Activities Report to be released in August 2022, and to releasing the full year financial
results on 20 September 2022.
i hold NHC
now a top ten holding after several years of looking like a major mistake