New Hope Coal (NHC), which is, with TPG Telecom, part of the Soul Patts corporate group based in Sydney, surprised yesterday with a better than expected interim result – this time from a major expansion move at the depth of the recent coal recession.
And like shareholders in TPG, there’s a higher dividend (of which the main beneficiaries will be the Teoh family at TPG and Soul Patts and Soul Patts at New Hope which holds a 59.7% in the miner).
And naturally having seen the benefits of the first stake, New Hope now wants all of Bengalla with Wesfarmers having put the 40% it owns up for bids.
The $US606 million ($US785 million) acquisition of Rio Tinto’s 40% in the Bengalla mine in the NSW Hunter Valley proved a nice boost to New Hope’s half year performance, thanks to the surge in world thermal coal prices in late 2016.
The Bengalla deal was announced in September 2015 when thermal coal prices were low and still falling (they didn’t bottom out until the first quarter of 2016) and looked an over expensive purchase for a company that has had trouble expanding its long held Acland mine on Queensland’s southern daring Downs.
Acland and the smaller Jeebropilly mines made an after tax contribution of $17.9 million to New Hope in the six months to January 31, while Bengalla delivered double that – $39.7 million. Bengalla’s bigger contribution was achieved despite the fact more tonnes of coal were mined at Acland (its coal is lower quality and more costly to export).
The surge in global prices had a bigger benefit for Bengalla with its higher quality coal.
As a result New Hope earned an underlying profit of $54.8 million for the half, more than treble the $15 million eked out a year earlier in the lows of the coal slump.
Statutory profit was boosted to $68.3 million, after a Queensland Competition Authority ruling saw New Hope win a $13.9 million after tax refund on rail tariffs paid since 2013.
The result could have been stronger had New Hope’s export facility in Brisbane not been temporarily closed shortly before Christmas.
Shareholders will receive a fully franked interim dividend of 4 cents a share, double the amount paid for the first half of last year.
The miner currently has an opportunity grow the size of its stake in Bengalla, with Wesfarmers selling its 40 per cent stake in the mine.
New Hope is expected to bid for the mine, and said on Tuesday it would try to "secure further cost efficiencies at the mine".
New Hope shares rose 6.6% at $1.86.
