New Hope overcomes the odds

NEW Hope Corporation has increased its net profit after tax 174% year-on-year to $A503.1 million for the 2010-11 financial year, as its gains from Arrow Energy shares outweighed the flooding impacts to its Queensland thermal coal mines.
New Hope overcomes the odds New Hope overcomes the odds New Hope overcomes the odds New Hope overcomes the odds New Hope overcomes the odds

Oaky Creek equipment on the water.

Blair Price

An early shareholder in Arrow Energy, NHC finalised the sale of its significant stake in August 2010, which resulted in $329.4 million NPAT for the recent financial year.

NHC also made $40.3 million NPAT in May by selling 10% of its Lenton coal project – west of Rio Tinto’s Hail Creek mine in the Bowen Basin – to a Taiwanese power company.

Excluding such non-recurring items, NHC’s profit was down 20% year-on-year to $146.9 million, which reflected the toll of a devastating wet season on its key Acland mine in southeast Queensland.

Aside from an 11-week rail outage because of the floods, the miner also faced lower demand from post-quake Japan earlier this calendar year.

Despite these impacts, NHC said it still hit record export sales of 5 million tonnes for the recent financial year.

This result was aided by its Queensland Bulk Handling business at Brisbane’s port which ramped up to load ships at a rate of 9 million tonnes per annum for the last two months of that year.

While the Acland mine is back to its nominal capacity of 4.8Mtpa, an expansion of the QBH facilities has hit export capacity of 10Mtpa.

After a long takeover play for Queensland coal explorer Northern Energy Corporation which started 11 months ago, NHC owns 98% of the share registry and is likely to mop up the remaining shares in the coming months.

NEC’s Colton project will add some coking coal to NHC’s export mix, and mining is expected to start by the end of 2013.

While the project is only targeting 500,000tpa, recent drilling indicates there is scope for an expansion to 2Mtpa.

NHC is targeting 6Mtpa of production for the 2012 calendar year, but also aims to double production in the coming years due to its boosted exploration portfolio.

“The Northern Energy acquisition together with our organic Acland expansion plans and the Lenton project development, provide an excellent development portfolio of future corporate expansion plans,” New Hope managing director Robert Neale said.

“Subject to appropriate government and corporate approvals, we can envisage a doubling of production over the next five to seven years, which could consume our current excess cash reserves of about $1.5 billion.

“We have commenced recruiting staff to support the planning and development of these projects.”

The board has declared a final dividend of 5c per share and a special dividend of 15c per share for the year.

NHC shares are up 5c, or 1%, to $5.15 this morning.