Daunia and Blackwater sale proceeds

Rumours up to around $USD 6 billion or so for both (sold separately or together). We will receive half as this is part of the 50/50 BMA JV.

So $USD$3 billion potentially or AUD$4.7 billion. That’s worth circa AUD$0.93 excluding any tax liabilities.

What should we do?

1. net debt reductions? We now have a fair bit of net debt thanks to OZL acquisition and ongoing large capex, particularly Potash.
2. share buyback? Not a bad time to reinvest in the business at an attractive multiple and likely higher ROE than acquiring any other business to replace lost coal earnings. Potentially more accretive to EPS over long term.
3. Special dividend. Everyone likes cash, however given higher debt and lower share price I’m not so sure this is the best outcome. We already get attractive dividends from our legacy assets.
4. combination of 2 or all 3 options?

Personally I’d rather the bulk of the proceeds to be a share buy back. Will have to be on market given labor closed off market buybacks. Our last one from the shale divestment was hugely beneficial to all shareholders. 70% buyback, 30% debt reduction.

Any other opinions around? I don’t see see a need for an acquisition as no tier 1 copper mines are for sale. We also have enough organic growth via potash and the OZL copper hub realisation into OD, plus the oak dam west mine into this. Potentially even resolution with RIO in the USA.