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Mining
Thermal coal prices remain historically strong, but love for miners has waned since the heady days of the 2022 boom.
Having banked oodles of cash over that period, when high CV Newcastle thermal was going for over US$450/t at one point, they’re still in good shape for the most part.
New Hope Corp (ASX:NHC) is one example.
Prices are now around US$130/t after successive mild European winters which throttled demand and left gas stores well stocked despite a pause on Russian imports by the EU.
But New Hope has kept its cash costs in check, and generated strong margins through the first half of FY2024 despite a 58% drop in realised prices against FY2023’s superprofits level first half.
Accounts released today reveal NHC pulled in $251.7m in after tax profits, down from $668.6m a year earlier, for the six months through the end of January.
Underlying EBITDA fell from over $1 billion to $424.8m, but saleable coal production lifted 28% to 4.1Mt, assisted by better weather and logistics at the Port of Newcastle for product from NHC’s Bengalla mine and first coal sales from its Stage 3 revival of the New Acland mine in Queensland.
Free on rail cash costs only lifted slightly from $65.4/t to $68.1/t excluding the ramp up of New Acland, with plans to expand Bengalla to 13.4Mtpa said to be tracking ahead of schedule.
While last year’s monster 40c per share dividend could not be matched, NHC will still pay out 57% of first half profits, returning $143.7m or 17c per share in the form of an interim dividend.
“Consistent operational performance, delivery of our organic production growth plans, and disciplined cost control have allowed us to maintain strong margins despite coal prices retreating from record highs,” NHC CEO Rob Bishop said.
“At our Bengalla Mine, our 13.4Mpta growth project is tracking ahead of schedule, and we expect to see unit costs decline as production increases in the second half of the financial year.
“During the half, New Hope acquired the West Muswellbrook Assessment Lease, known as AL19, and progressed exploration work at our Exploration Lease area, EL9431. Both to the west of our Bengalla Mine, these provide synergies to our mining and agricultural assets as well as long-term optionality,” he said.
$3.8b capped New Hope’s shares were up over 1% this morning, though they’ve fallen almost 40% from the highs hit in October 2022 as thermal coal prices surged.
Most coal miners have been increasing their investments in met coal to take advantage of stronger long-term fundamentals for steelmaking.
New Hope increased its exposure via a ~$80m contribution to a ~$180m placement to raise its stake in unlisted Maxwells mine owner Malabar Resources to 19.9%, the highest it can claim before making a formal takeover offer.
Bellevue Gold (ASX:BGL) was among the strongest performers in the ASX 200, lifting upwards of 5.5% in morning trade after unleashing some high grade gold hits from drilling at its 1.4Moz Deacon Lode.
The largest component of the Bellevue mine’s orebody, the company says it has struck similar material to the high grade pyrrhotite shoots mined in the 1990s at a previous iteration of the Bellevue mine at around 13g/t.
Results at around 80% of true width include hits like 10.8m at 66.8g/t, 8.9m at 71.1g/t and 7.5m at 49.8g/t, with BGL saying it has also uncovered the potential to find a further six high grade shoots in broader spaced drilling at Deacon.
The higher grade ore found in the infill drilling could bring stronger grades earlier in the mine plan at the operation, officially opened last week as gold hit all time highs in excess of US$2180/oz.
Bullion is now trading at US$2158/oz (~$3300/oz Aussie) although Bellevue has around 25% of production in its early years hedged at $2785/oz.
RBC’s Alex Barkley, who has an outperform rating and $1.80 price target on Bellevue, said the investment bank had long thought Bellevue’s grades could reconcile higher than its 6.1g/t reserve. The miner produced over 13,000oz at 5.2g/t in the month of February, with low grade stockpiles still forming part of its mill feed during the 200,000ozpa mine’s ramp up.
“An increase in 1g/t (in reserve grade) could lift our site NPV by roughly 20%. We maintain our positive view of the Bellevue orebody, milling upside potential, and management’s ability to unlock this value,” Barkley said in a client note.
READ: There’s no better time to open Australia’s newest gold mine as prices scale record highs
Who knew the old CSA Cobar mine offices resembled Mel Gibson’s apartment from Conspiracy Theory?
Glencore may be one of the biggest conglomerates in the mining world, but it turns out their record keeping closely resembles your 95-year-old grandma’s recipe book, replete with old country slang and inscrutable handwriting.
Turns out any data on the drilling at the mine below 850m was held in hard copy form.
Metals Acquisition (ASX:MAC) is doing what it can to pull the high grade New South Wales copper mine into the 21st century, digitising this data to pull it into a future resource update.
“Based on the initial information it would appear that there are reasonable prospects for additional mineralisation in the top 850m of the mine,” the newly dual-listed US and Australian copper producer said.
The mine extends down some 2.3km from surface, comprising a series of high grade lenses 10-35m in width, many of which grade over 5% Cu. Early indications are that at depth the copper tonnages per vertical metre increase.
There’s some fresh drilling today also that will give investors confidence the high grade deposit’s growth won’t stop, even after a resource and reserve upgrade based only on drilling to August 31 last year, due in the June quarter.
New results from underground drilling at the QTS North orebody clocked up a headline strike of 19.2m at 10.4% Cu from 114.8m in UDD23025, with 16m at 10.4% Cu from 102m in UDD23024 and 14m at 7.9% Cu from 159m in UDD20139.
Results from QTS Central and the QTS South Upper A zone were also strong, including hits of 11.5m at 11.8% Cu from 180.5m (UDD22052), 15.6m at 6.1% Cu from 152.4m (UDD22049A) and 14.5m at 9% Cu from 146.5m (UDD22054) in QTS Central.
Drilling from QTS South Upper A included copper grades as high as 21.3%, and a high grade zinc-lead hit of 4.3m at 14.2% Zn, 3.9% Pb and 0.8% Cu from 294.4m in QSDD060.
MAC CEO Mick McMullen said the return on capital from adding incremental resources at CSA was compelling.
“These results continue to showcase why we think the CSA Copper Mine has a long future with continued exploration success converting the Inferred Resource to Measured and Indicated, together with adding new mineralisation to the inventory. QTS North continues to demonstrate good continuity at depth with what is in line with observed CSA Copper Mine widths and grades such as the 19.2m @ 10.4% Cu in UDD23025,” he said.
“QTS Central appears to be getting wider with the new drilling which is very encouraging from what is already our highest margin ore. The shallow high-grade results from QTS South Upper A are very encouraging and work is underway in incorporating this into a resource estimate for mine planning purposes.
“The presence of a high-grade Zn lens in this area is interesting and drilling is underway on the shallow potions of the nearby East and West lodes to determine what mineralisation may not have been mined historically.”
Strong Chinese data gave a shot in the arm to copper and iron ore, the former holding above roughly year long highs of US$9000/t and the latter back beyond US$100/t after a couple of rough weeks.
“The positive economic data in China helped reverse earlier losses in the iron ore market. The rise in fixed asset investment should help support steel demand. However, hopes of a revival in the property market were dashed after the data showed investment in property development fell 9% y/y in Jan-Feb,” ANZ’s Madeline Dunk, Brian Martin and Daniel Hynes said.
Predictably iron ore producers led the large cap gains, with Mineral Resources (ASX:MIN), BHP (ASX:BHP) and Fortescue (ASX:FMG) all among the ASX 100’s top performers early doors.
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