Shares in New Hope (ASX: NHC) were 10% higher in early afternoon trading after the coal miner lifted its 1H FY25 dividend and profit, while also announcing a major buyback.
Due to higher output and sales along with reduced costs, the company reported a 1H profit of $340.3 million, up 35% on the previous period, which was a beat against consensus forecasts.
Underlying earnings were $517.3 million, compared with $424.8 million in the previous period, and a 19c share dividend was 12% higher than the 17c payout during the preceding period.
Overall, total coal sales for the period were up 44% to 5.4 million metric tons, driven primarily by a significant increase in output at the New Acland mine in Queensland, where production rose tenfold.
Commenting on today’s result, New Hope's CEO, Rob Bishop highlighted the contribution of Bengalla Mine now operating at 13.4Mtpa capacity, and the New Acland Mine which now has a clear runway to ~5Mtpa run rate by 2027.
Today’s result, added Bishop, also demonstrates the 'low-cost operations' greater resilience to fluctuating coal prices which declined during the period.
“We remain focused on ramping up production at New Acland Mine and sustaining increased production at Bengalla Mine, while continuing our disciplined approach to cost control,” said Bishop.
“Our performance in the first half of the year has us tracking very well in terms of our guidance ranges.”
The miner’s guidance remains unchanged at ROM coal production of 15,480,000 to 17,000,000 tonnes and coal sales of 10,660,000 to 11,750,000 tonnes.
Other key 1H FY25 numbers include:
- Net cash flow from operations more than doubled to $316.9 million.
- $805 million in available cash.
- On-market share buy-back of up to $100 million.
New Hope lifts its Malabar Resources take
During 1H FY25 the miner increased equity interest in unlisted Malabar Resources from 19.97% to 22.97%.
At face value, New Hope’s interest in Malabar appears to be a pretty bold move, especially given the government’s hardening stance on coal and plans to reduce Australia’s greenhouse gas emissions by 43% below 2005 levels by the end of the decade.
But given the attractiveness of this resource, New Hope may continue to consolidate its stake in Malabar as it did with Bengalla (in which it now owns 80%).
Malabar continues to progress the Maxwell Underground Mine, which is a “boutique” underground metallurgical (MET) coal project - located 10 kilometres south-west of Muswellbrook in the Hunter Valley – which is in close proximity to New Hope’s cornerstone asset the Bengalla open cut thermal coal mine operation.
The Maxwell Underground Mine is fully permitted and approved for production until 2047 and appears to align with management's plans to invest its surplus cash into coal assets that are low on the cost curve with long life approvals.
As a large, high-quality resource, with a 25-year mine life, Maxwell is expected to produce an initial 3 million tonnes of coal, before rising to around 6 million tonnes per annum.
The Maxwell Underground Mine project also comes with a 25MW solar farm with which to mitigate energy inputs and major above-ground infrastructure from the former owner.
New Hope has a market cap of $3.4 billion making it an ASX200 stock. The share price is down 8% over one year and down 17% year to date.
Up until today, New Hopes shares appear to have been in a long-term bearish trend confirmed by multiple indicators.
Consensus is Hold.
This article does not constitute financial product advice. You should consider independent advice before making financial decisions.
