Going into a trading halt this morning, Macarthur said its fully underwritten institutional placement would raise approximately $190 million for the issue of 31.8 million ordinary shares at $6 per share.
Macarthur said the placement would ensure the company met its growth objectives of doubling production in five years.
Funds will go to developing its 70%-owned Middlemount open cut mine in Queensland’s Bowen Basin, which has coal reserves totalling 56.9 million tonnes, consisting of 28.5Mt of proved and 28.4Mt of probable reserves.
Macarthur will also use the proceeds to continue the pre-development and evaluation of its 85%-owned Codrilla and Wilunga projects to the north and other ongoing exploration.
Under the non-underwritten share purchase plan, Macarthur is proposing to offer its existing Australian and New Zealand registered shareholders up to $15,000 worth of shares at the price of $6 per share.
Macarthur has forecast net profit after tax to be in the range of $155-170 million for the current financial year.
The leading pulverised coal injection coal producer is anticipating total coal sales volumes of 4.5-4.8Mt for the same period, up from its previous guidance of 3.9Mt.
“The significant increase in sales tonnage is due to better than forecast spot thermal and short-term LV PCI coal sales during the second half of the financial year,” the company said.
Macarthur is also aiming to improve its hedge book position.
In late January the company announced a loss of $US97.96 million in net profit from its hedged foreign-exchange contracts.
“These increased sales will help the company to reduce the outstanding hedge book more quickly than anticipated earlier in the year,” Macarthur said.
“It is expected that the March 2009 quarter hedges that were rolled forward will be cleared by the end of July.”
In an important notice to shareholders, Macarthur flagged a potential change to its historical dividend policy.
“The board advises shareholders that it has made no decision with respect to a full-year dividend and it may not follow its historical practice of paying 50% of full-year NPAT as a dividend.
“This is due to a number of factors, including current uncertainties about the timing of recovery in global steel markets and therefore metallurgical coal demand, as well as the company’s implementation timeframe for its new growth projects.”
A final decision on the matter will be made following the finalisation of the annual accounts, due out on the Australian Securities Exchange on August 26.
Meanwhile, in a presentation made at the UBS Annual Resources Conference yesterday, Macarthur noted the impact of Chinese coal demand, despite the country’s vast reserves.
“While the data is inconsistent, the anecdotal evidence is very strong as sales of metallurgical coal to China have increased significantly over the calendar year.”
Macarthur said it had shipped a number of cargoes of low-volatile PCI and thermal coal to China for the first time in the company’s history.
It cited the early indications of Australian metallurgical coal exports to China in May reaching 4.1Mt and noted, as already observed in the coal industry, that Chinese domestic metallurgical coal had fallen because of tougher safety regulations.
For the steel market, Macarthur said world steel production across most regions was starting to show signs of recovery with even non-Chinese production improving.
“A significant amount of spare capacity exists around the world so it will be some time before capacity utilisation rates recover to previous levels.”
Shares in Macarthur remain in halt at $6.62.
