NEW HOPE TURNS TO ASIA AFTER DOUBLING LOSS
Written on the 20 September 2016
FALLING coal prices and a string of impairments has seen New Hope Corporation (ASX:NHC) more than double its full-year loss to $53.7 million.
The Brisbane-based energy company's loss, up from $21.8 million a year earlier, was driven by $52.1 million in acquisition costs and $33.1 million in writedowns.
New Hope acquired a 40 per cent stake in a Hunter Valley mine as part of a joint venture with Bengalla Mining Company for $850 million last year.
New Hope managing director Shane Stephan (pictured) says the acquisition has had a positive impact on the company's cash flows.
"We announced the Bengalla transaction in September 2015 and it completed on March 1 this year, when the benchmark Newcastle Spot price was US$51/tonne.
"Since the beginning of July there has been a significant rise in coal prices with the Newcastle Spot price currently at US$70/tonne.
"During the five months of New Hope's ownership Bengalla production contributed 1.5 million tonnes to our coal sales providing EBITDA of $21.3 million to the group result."
He says Bengalla production will increase to 3.5 million tonnes by next financial year, taking New Hope's thermal coal production to 8.9 million tonnes in FY17.
Despite the loss, revenue climbed 5.1 per cent to $531.5 million compared to the previous year. Total earnings before interest, tax, depreciation and amortisation declined 38.8 per cent to $81.3 million.
Stephan says the Bengalla deal, as well as a number of investments by New Hope's oil subsidiary Bridgeport Energy, will help the company capitalise on growing demand for thermal coal in Asia.
"The high quality coals that New Hope produces will be demanded for many decades to come, in particular in the growing economies of North Asia," he says.
"New Hope has a significant suite of coal growth projects in the North Surat as well as Lenton, Colton and Yamala.
"Having made the investments in both resources and corporate capability during the recent years of cyclical downturn, the group is now in a prime position to take advantage of potential increases in future coal and oil prices."
The board has declared a dividend of 2 cents per share to be paid on November 1.