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Mining
Coronado (ASX:CRN) shares fell as it issued a pale fixed biannual dividend of just 0.5 US cents a share despite a massive lift in revenue and profit after a record 2022.
The coal miner enjoyed all time high pricing amid an energy supply crunch last year, powering a 66.2% lift in revenue to US$3.57 billion, with EBITDA up 150.1% to US$1.22b and net income a massive 307.4% higher at US$771.7m.
CRN enjoyed a 92.6% lift in average realised met coal prices to US$265.8m, but also saw operating costs lift 53.5% to US$141.3/t with capex up 103.4% to US$185.4/t as sales fell 7.7% to 16.4Mt.
The slim, bare minimum dividend payment appears to set up the US and Australian coal miner, owner of the Curragh mine in Queensland’s Bowen Basin, for a run at M & A to grow and diversify its business.
It comes after a more liberal CRN distributed US$700.2m to shareholders in 2022.
The big, flashing neon sign on the corporate highway is BHP’s Blackwater mine, which the world’s biggest miner said yesterday it would sell off from its BMA business in Queensland along with the Daunia mine.
Blackwater is virtually adjacent to Curragh.
CRN managing director Jerry Spindler, who will move to a non-executive role at the mine’s AGM in May as Douglas Thompson takes the helm, played a straight bat to questions about whether it would be in for BHP’s assets.
“Discipline is key in any case and as we’ve said before, there’s no such thing as a good deal on a bad project,” he said.
“Again, we’ll take a look at the details of the project check those that suit us best and proceed from there.”
But Spindler admitted CRN was being conservative with its balance sheet with a view to growth opportunities, with Coronado having seen a deal to merge with thermal coal heavy US coal miner Peabody Energy fall apart last year.
“I think that’s right, generally, I’m not sure that it’ll take three to six months for this to shake out. But … we’ll be working to achieve clarity as quickly as we can,” he said.
“And we have the flexibility to do any number of things including pay dividends if we don’t do an acquisition. But that remains to be seen.”
Coal miners have been up in arms about a major royalty increase last year from the Queensland Government that has generated billions in additional revenue from the State.
But it has also seen miners threaten to pull investments, with BHP for instance saying it will not guide growth capex at its Queensland coal mines due to the impact of last July’s royalty introduction, which came without consultation and includes a tier with a 40% charge on coal sales once they exceed $300/t.
Analysts have pointed out miners remain keen on deals to buy up Queensland coal assets (though Glencore has dumped new developments and announced early mine closures), with met coal prices of around US$380/t today extremely attractive to Queensland producers despite the larger share of profits heading to the State.
“We’re swapping existing assets when we do this, when we look at these kinds of opportunities,” Spindler said in response to queries about a likely high level of interest in BHP’s Daunia and Blackwater mines.
“There will be an impact on new brownfields or greenfields sites without question.”
CRN, which switched some sales from met coal to thermal to capitalise on stronger demand from energy than steel markets in the second half of 2022, is less bullish however on thermal coal now.
Prices have roughly halved in 2023 so far, though front month futures lifted US$17.50/t yesterday to US$197/t.
OZ Minerals (ASX:OZL) is quietly trundling towards its merger with BHP this year, promising a $1.75 per share special dividend to investors if the scheme is voted up.
That would enable shareholders to enjoy some sweet, sweet franking credits as part of the transaction, which will see BHP tip in $28.25 for every OZ share in a $9.6b offer. The would see shareholders receive the fully franked dividend along with $26.50 in scheme consideration from the world’s biggest mining company.
It comes after a 60.9% fall in profits on higher costs and lower copper prices from $530.7m in 2021 to $207.3m in 2022, all roughly expected by analysts. In fact profits were around 12% above analysts’ $184m consensus.
In a half-year reporting season blotted by falling profits across the gold and broader mining sector, Perseus Mining (ASX:PRU) has again made its claim to the title of Australia’s top performing gold miner.
The West African gold miner saw profit after tax rise 60% to $203 million, with EBITDA up 40% to $354.4m and revenue up 22% to $665 million for the first half of 2022-23.
The owner of the Sissingue, Yaoure and Edikan gold mines produced 268,371oz at all in site costs of US$930/oz in the December half, selling 261,921oz at average prices of US$1724/oz.
That has supported an interim dividend of 1.06c per share, a payout of around $14.5m, with market guidance of 498,370-528,370oz at AISC of US$1000-1100/oz for FY23.
It was quite another story at legacy Aussie gold miners St Barbara (ASX:SBM) and Silver Lake Resources (ASX:SLR).
St Barbara announced an impairment fuelled statutory loss of $407.1m, worsening an underlying loss of $8.6m by writing $420m ($298.2m post tax) and $74.2m respectively off the value of its Atlantic and Simberi gold operations in Canada and PNG.
Those mines will be split off from SBM into a new company called Phoenician Metals as part of its merger with Raleigh Finlayson’s Genesis Minerals (ASX:GMD) to form the Hoover House operator of the Gwalia gold mine.
St Barbara produced 124,676oz in the first half of 2022-23, but has bolstered its resource and reserve base, adding 800,000oz or 13% to take ore reserves to 6.5Moz and 2.9Moz or 21% to its mineral resource, now at 16.4Moz.
The result was a massive swing from a $14 million profit in the first half of 2021-22. St Barbara was hammered by higher costs from diesel and reagents at Leonora and the recommencement of mining at Simberi, with its opex lifting from $180m last year to $255m in H1 2023.
Meanwhile, Silver Lake Resources has also reported a net loss after tax of $14.8m, a swing from a $44.5m NPAT in H1 2022, with EBITDA falling from $157.6m to $73.1m.
SLR says its sales will be weighted to the second half of 2023, with gold sales of 115,790oz at costs of $2153/oz in the first half the smaller portion of its guidance of 260,000-275,000oz at all in sustaining costs of $1950-2050/oz.
SLR produced 126,718oz at $1597/oz in H1 FY22, with cash and bullion on hand falling from $277.9m to $253.3m year on year, though the Deflector, Sugar Zone and Mt Monger gold mine owner remains debt free.
Mining
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