It's Christmas in ... er ... May for Coronado investors. Pic: Getty Images
Monsters of Rock: Coronado showers holders with $290mn dividend payment as coal revenues soar
Mining
share
- Coronado Global Resources announces US$200 million dividend payment including massive special payout on March quarter results
- CRN has been mooted as a potential acquirer of assets as coal miners’ cash windfalls begin to burn a hole in their collective pockets
- Boss Gerry Spindler says payouts will take precedence over “building a war chest”
Coronado Global Resources (ASX:CRN) boss Gerry Spindler says the US-Australian coal miner plans to distribute its coal boom windfall to shareholders in favour of building a war chest after announcing a massive US$200 million ($287m) payout to shareholders.
Coronado is one of a host of coal miners enjoying the fruits of a remarkable lift in coal prices since the middle of last year.
The company announced a 152% year on year increase in first quarter revenues today for the first quarter of 2022 to US$947.1 million ($1.35 billion), and a quarterly profit of US$269.9m ($387m).
That saw the firm flip from a US$290.7m net debt position this time last year to net cash of US$256.8m as prices paid for its coal lifted from US$83.3/t to US$215.1/t and average met coal prices climbed from US$94.3/t to US$266.5/t, more than making up for a lift in operating costs from US$82.3/t to US$121.5/t year on year.
Realised prices are expected to rise in the next quarter.
CRN has committed to pay a fixed twice yearly dividend of 0.5 US cents a share with a broader target to pay out 60-100% of free cash flow.
While tax losses mean they remain unfranked, Coronado has tipped a 6c a special dividend on top of a 5.9c a share general payout, sending US$200 million into the pockets of shareholders alongside a US$100.6m offer to purchase outstanding senior secured notes.
Not building a war chest
News of failed takeover talks between Coronado and US coal miner Arch Resources briefly livened up a dry week of mining news last week and CRN is understood to be on the hunt for new assets.
A number are thought to be coming to market from bigger players looking to exit or sell down their coal holdings, with suggestions growing BHP (ASX:BHP) could split some mines off its BHP-Mitsubishi Alliance JV in Queensland as record profits for junior and mid-tier coal miners like Coronado bring more willing acquirers into the market.
But boss Gerry Spindler says the company will not restrict shareholder returns to build a “war chest” in anticipation of a big buy.
“We are not going to build a war chest, we are not going to accumulate cash for an unidentified acquisition,” he said on an investor call.
“If one comes along we will begin to make plans on the most efficient way to do it.
“But in this market, it may take a while for a good one to come along and building a war chest is not something that we’re gonna do.
“We’ll distribute the cash.”
