No joy yesterday for the enthusiasts wanting to see a marriage between US/Australian coal companies Coronado Global Resources and Peabody Energy.
Coronado first revealed talks with Peabody three weeks ago but there has been no more action, despite some media reports last week claiming the two were close to a deal.
While no merger deal with Peabody Energy has been agreed upon, Coronado said on Monday discussions were ongoing and again pointed out there was no certainty of a deal being done.
The news saw the shares end unchanged at $1.86 on a day when the wider market rose strongly. Coronado shares traded up to $2.09 when the Peabody talks were revealed.
While the deal with Peabody remains up in the air, Coronado again noted that its stronger balance sheet and shares give it greater tools with which to do mergers and acquisitions.
Any deal will be an all-share takeover of Coronado by Peabody, something a few investors don’t want because Peabody has already gone bust once in the past five years and almost collapsed in early 2020 when a hedging contract covering coal from the Wambo mine in the Hunter Valley, almost brought the American miner undone.
Monday’s quarterly report also revealed a special dividend for shareholders which is not the action of a company heading towards a $10 billion marriage.
The quarterly report also revealed more damage from the big wet, rising inflation and higher mining costs during the third quarter.
Despite that – which saw a downgrading in guidance – the miner still managed record year-to-date (YTD) revenue results and strong liquidity.
Coronado reported group revenue of $US2.85 billion for the first nine months of 2022 – more than double the previous year’s $US1.374 billion.
As a result, the company declared a $US225m million third-quarter special dividend which will see shareholders receive US13.4 cents per CDI on December 12.
After payment of the special dividend in December, the fifth dividend the company has offered shareholders this year, Coronado said it will have returned $US699 million in cash dividends to shareholders so far this year.
As well as the special payout, the company has started an offer to purchase for cash up to $US200m aggregate principal amount of its 10.750% senior secured notes due 2026.
The company said revenue fell 15.3% quarter-on-quarter to $US875 million on a 4.8% rise in coal sales to 4.1 million tonnes with sales from its mines in the US were up 5.8% to 1.7 million tonnes and sales from the Curragh mine in central Queensland rose 4.2% to 2.4 million tonnes.
Due to the impact of wet weather at the Curragh mine, the company has lowered its saleable production guidance for 2022 to 16.9 to 17.1 million tonnes from 18 to 19 million tonnes.
That will see costs rise to a range of $US81 to $US83 a tonne from $US79 to $US81 a tonne.
And in an interesting comment, the Financial Review reported yesterday that one of the biggest individual shareholders in Coronado says any takeover deal by US giant Peabody using scrip instead of cash would be unappealing because it leaves investors with too much exposure to thermal coal.
The comments came from Queensland farmer and philanthropist Lyn Brazil, who owns about $5.5 million in Coronado shares.
Mr Brazil said he wasn’t confident about taking shares in Peabody in a potential scrip-based merger.
“We are not too enthusiastic about getting shares from Peabody who are essentially thermal coal people in exchange for our coking coal,” Mr Brazil said.
“We got out of thermal coal because it’s probably starting to peak, and they think it could come down, but coking coal has still got a better future.”
