Ann: Half Year Results Presentation, page-31

	New Hope Will Consider BHP Coal Mines Amid Growth Push -- Interview
1	21/03/2023 1:39PM
2	By Rhiannon Hoyle Australian coal miner New Hope Corp. will consider buying coal operations from rivals such as BHP Group Ltd., even as it invests in expanding its existing operations, its chief executive said in an interview. The company on Tuesday reported a doubling in first-half profit after benefiting from a surge in coal prices, fanned by Europe's efforts to wean off Russian energy supplies due to the war in Ukraine. It said it would pay a special dividend and restart a share buyback that was paused in December, as the miner chose to repurchase some senior convertible notes. New Hope said it finished the half-year with a significantly reduced amount of debt and was well-placed to pursue growth. Some diversified mining companies have been selling coal operations as they pivot to focus on commodities such as copper needed in a global energy transition. Last month, BHP Group, the world's biggest miner by market value, said it had started looking for a buyer for the Daunia and Blackwater coal mines it owns in Australia in joint venture with Mitsubishi Corp. "We will be looking at those assets and we'll assess them and see whether they fit," New Hope CEO Rob Bishop told The Wall Street Journal. "I think it'll be a fairly competitive process, but something which we will participate in." Even without dealmaking, New Hope reckons it can almost double production levels over the next three years from investments in its existing assets. In November, the company started work on resuming mining operations at its New Acland site in Australia's Queensland state, where approvals for a new stage of mining were slowed by years of legal challenges. The company is also expanding the Bengalla mine that it runs in New South Wales state. "Obviously organic growth comes as a priority because it's, I guess, the easiest and most certain--they're own assets, we know them well," said Mr. Bishop. Also, "the capital required to execute that is fairly conservative--it's really only about half a billion dollars...which, from an investor perspective, that's a fairly good return to effectively double our enterprise value from a production perspective," he said. New Hope Tuesday reported a net profit of 668.6 million Australian dollars (US$449.1 million) for the six months through January. It recorded a profit of A$330.4 million a year earlier. Directors declared an interim dividend of 30 Australian cents a share, as well as a special dividend of 10 Australian cents. The miner separately said it will resume the on-market share buy-back that it paused on Dec. 14, with roughly A$268.7 million remaining from the up-to A$300 million pot approved for the buyback. The miner's board and management don't think the company's share price reflects the underlying value of its assets, and expect the buyback could improve the value of the remaining shares on issue, New Hope said. The miner has been benefiting from strong demand for coal. Average realized prices climbed to A$467.40 a metric ton during its first fiscal half, from A$192.38 a ton a year earlier. The closing realized price was A$410.00 a ton, it said. That more than offset a fall in production for the period. Total first-half saleable coal production was down 28% on a year earlier, in part due to a focus on waste movement. Prices have more recently fallen back from all-time highs, as thermal-coal demand softened amid a mild Northern Hemisphere winter. But New Hope continues to have a heavily sold forward-sales book and "we're still making a very healthy margin," said Mr. Bishop. He said a hot Northern Hemisphere summer could drive another lift in prices in the months ahead, although unlikely back to the record highs of the past year. New Hope has sold some spot cargoes to China since the country lifted an unofficial ban on Australian coal shipments earlier this year, although not in material volumes, he added. "We're open to supplying China," said Mr. Bishop, adding that future production from the New Acland operation is today mostly uncontracted. "But it's probably not our priority," he said, highlighting much of New Hope's production is typically sold to long-term customers elsewhere in Asia. Write to Rhiannon Hoyle at [email protected]