Chief executive David Moult said the company was keen on metallurgical coal assets to add to “the three best thermal coal mines in Australia’’ which it already owns, but said Yancoal wouldn’t be drawn further on what it was considering.
The company isunderstood to be in the mix for Anglo American’s Australian metallurgical coal mines, with offers for those assets due by September 9.
Mr Moult said the company was conserving capital at the moment as part of a strategy to deliver outsized returns for shareholders through acquisition, replicating the strategy undertaken when it acquired Coal & Allied from Rio Tinto in 2017 for $US2.45bn.
That transaction brought the Hunter Valley Operations and Mt Thorley Warkworth into the business.
“I think that it’s really being in a strong position to take advantage of whatever opportunities might present themselves to us,’’ Mr Moult said of the decision to conserve capital in a advance of a possible transaction.
“It’s not for me to comment on specific situations that that may be there, however, we’re very conscious that there are opportunities out there.
“We want to be in a strong position. We want to be in a position where we can respond, and we want to be in a position where we can respond in a way where we can acquire, if they become available, assets that will add further value to shareholders.’’
Yancoal has paid dividends fairly consistently since the 2017 transaction with $1.22 paid out over 2022 and 69.5c over 2023, including a 37c interim dividend.
The news that the half year dividend would be suspended sent the shares more than 20 per cent lower to $5.51 by early afternoon on Tuesday.
Mr Moult said Yancoal was debt free with net cash, and in a “very strong position” to execute on a deal which might present, but also would not be drawn on how much the company might spend.
There was a clear preference for metallurgical coal assets over thermal coal however.
“We’ve made it quite clear over recent times that our preference would be for metallurgical assets if they became available,’’ Mr Moult said.
“We do look at other thermal assets, but at the end of the day, we’ve got, in my opinion, the three best thermal coal mines in Australia.
“We’re already the owner of those mines, and they are our three tier one operations that account for around 80 per cent of everything we do. What we would like to do is balance that portfolio.’’
Meanwhile the company’s first-half profit fell by more than half on the back of weaker coal prices.
Yancoal reported a net profit of $420m, compared with $973m for the previous corresponding period, down 57 per cent. Revenue was 21 per cent lower at $3.14bn.
Yancoal said its overall average coal price fell 37 per cent from the price achieved in the previous first half, down from $278 per tonne to $176 per tonne.
This was “mainly as a result of a decrease in global US dollar coal prices, with the weekly average Globalcoal Newcastle Thermal Index decreasing by 35 per cent per tonne during the period’’.
Yancoal said it had been focused on cost reductions across the business, and had reduced its production price per tonne, excluding royalties, from $109 to $101.
“The decrease is primarily due to the increase in saleable production volumes, being partially offset by continued inflationary cost pressures,’’ Yancoal said.
“The group’s attributable saleable production guidance for the full year is between 35 million tonnes and 39Mt,’’ Yancoal said.
“Attributable saleable production for the first half of the year is 17Mt, with the group’s production expected to be significantly skewed toward the second half of the year.’’
Yancoal said it was also looking at brownfields expansion opportunities within its portfolio.
“In the year ahead, the group will continue to focus on exploration and potential expansion works across the tier-one assets of Moolarben, Mount Thorley Warkworth and Hunter Valley operations, to be funded from operating cashflows,’’ the company said.
“The Mount Thorley Warkworth underground mine pre-feasibility studies are subject to further assessments, including synergies with the open-cut which should conclude in 2024, likely leading to a feasibility study in 2025.
“Should the development proceed, it could significantly extend the future production profile.’’
Mr Moult said the company was looking forward to an “extremely strong second half’’ from a production perspective, and the company was expecting its cost per tonne to reduce to $89-$97.
(20min delay)