Rio Tinto’s NSW coal arm, Coal and Allied, has produced an interim result that tells the story of the Australian coal industry: a strong first quarter with record prices, and a weaker three months to June that will set the tone for the rest of this year.
The company, which is 75% owned by Rio said first half net after tax jumped to $324 million compared with $195 million reported in the first half of 2008.
That was on 31% jump in revenue, driven by higher first quarter coal prices, to $1.250 billion for the half, compared with the same period in 2008
The company said that came "despite lower sales volumes which were offset by slightly stronger average US dollar denominated coal prices and the benefit of a weaker Australian dollar against the US dollar.
"The record coal prices from the second half of 2008 continued in the first quarter of 2009, however, we will see lower US dollar denominated coal prices in the second half of 2009 compared with the second half of 2008."
Coal & Allied said its share of production in the first half of 2009 was down 8% compared with the same time last year because of the combined adverse impacts of wet weather in the Hunter Valley, increasing stripping ratio at the Mt Thorley Warkworth mine and the commissioning of a new coal handling facility at the Bengalla mine.
Coal & Allied share of saleable coal production decreased by 800,000 tonnes to 8.7 million tonnes in the June half.
Production was adversely impacted by weather interruptions, an increased strip ratio at Mount Thorley Warkworth and commissioning of a new coal handling facility (ROM hopper) at the Bengalla mine.
Reduced coking coal demand due to weaker steel demand resulted in a 38 per cent decrease in the production of semi soft coking coal compared with the first half of 2008.
The company said semi-soft coal production was emphasised in 2008 to take advantage of the higher semi soft coking coal prices relative to thermal coal prices at that time.
Higher stripping ratios contributed to increased waste removal and therefore higher operating costs in the first half of 2009 compared with the first half of 2008.
The company has declared an interim ordinary dividend of 160 cents per share fully franked which is the same dividend as paid for the first half of 2008.
"Sales volumes for the half year were six per cent lower than the comparative period in 2008, but in line with allocated port capacity,” the company told the ASX.
"Benchmark export coal prices for the Japanese fiscal year commencing 1 April 2009 were lower by 42 per cent for thermal coal and 68 per cent for semi soft coking coal compared with 2008.
While these prices were considerably lower than 2008, they were still the second highest prices in history."
The company is the first of Rio’s listed partly-owned subsidiaries to report; uranium miner, ERA reports tomorrow.
Dioro Exploration has finally thrown in the towel and recommended Avoca Resources’ hostile takeover bid after its attempt to sell a major mining asset failed on Tuesday.,
Dioro yesterday saw sense and said shareholders should accept Avoca’s sweetened scrip offer of one Avoca share for every 2.3 Dioro shares.
The offer values the target at 74.6 cents per share or about $68.3 million, based on the closing price of Avoca shares on Tuesday of $1.715.
Avoca shares fell by 4% yesterday to $1.645, cutting the value of the bid to around $66 million. DIO shares finished at 71 cents as the market sees its game over.
The previous bid was one Avoca share for every 2.4 Dioro shares which was an improvement on an initial offer of one Avoca share for every 2.82 Dioro shares held.
So DIO directors have managed to extract a higher offer from Avoca through their opposition.
"The directors of Dioro unanimously recommended that, in the absence of a superior offer, Dioro shareholders accept Avoca’s revised offer,” Dioro said in a statement yesterday
"Those directors of Dioro who control shares in Dioro presently intend to accept Avoca’s increased offer in respect of the Dioro shares they control, in the absence of a superior offer.”
Dioro had rejected Avoca’s previous offers, saying they undervalued its assets.
The company revealed last week that it was in "advanced discussions” with Canadian gold and copper miner Northgate Minerals Corporation regarding the sale of Dioro’s 49% stake in the Frog’s Leg mine in Western Australia, but Northgate said Tuesday that it had ended the talks.
Avoca, which operates mines neighbouring Dioro’s, has lifted its stake in DIO to 21.16%, from 20.23%.
That will now change quickly with the unconditional bid due to close on August 4 and with the DIO board recommendation.
Incitec Pivot yesterday confirmed James Fazzino; the company’s Chief financial officer would be the new CEO, replacing Julian Segal who resigned in April to join Caltex Australia.
Incitec (IPL) said Fazzino has been Incitec’s chief financial officer since 2003 and has 20 years of experience in the chemicals industry.
“We have well-balanced exposure in both explosives and fertilizers, the key inputs to the global mining, construction and agricultural industries,” Fazzino said in the statement.
Fazzino was chosen after a global search involving independent advisers.
IPL shares fell 2.9% yesterday to 2.68.
And property investor, Goodman Group ha
