New Hope Corporation Limited (New Hope, NHC, or the Company) produces high-quality thermal coal from its 100 percent owned New Acland open-cut mine in SE Queensland and its 80 percent owned Bengalla open-cut mine in the Hunter Valley. The Company owns the Queensland Bulk Handling export terminal at the Port of Brisbane. NHC has been listed on the ASX since September 2003 and its largest shareholder today is Washington H. Soul Pattinson, which owns 40 percent of the Company.

Strong 2024 operational and financial performance

New Hope turned in another year of impressive operational performance with a 26 percent lift in saleable coal production to 9.1 million tonnes, supported by a strong operational performance at Bengalla Mine and the successful restart of operations at New Acland Mine. FY24 coal sales were 14 percent higher than FY23 at 8.7 million tonnes. Of the 9.1 million tonnes of total production, 8.1 million was produced at the Bengalla Mine and 1 million tonnes at New Acland. Production capacity at New Acland is planned to be ramped up to about 5 million tonnes per annum by FY27.

The average realised coal price achieved in FY24 was $195 per tonne, down from the record prices in FY23, but still at high historical levels. The underlying profit margin per tonne was $89, a 62 percent decrease on the previous financial year. New Hope’s financial results were equally impressive with Underlying EBITDA at $860 million, being the third-highest result in the Group’s history. Net operating cash flow was $562 million and available cash at year-end was $824 million, including fixed-income investments that are reported as other financial assets.

A 22 cents per share fully franked final dividend will be paid on 24 October 2024. New Hope directors display a strong shareholder return bias balanced by a disciplined capital management framework. This is evidenced by the Group returning 40 percent of the current market capitalisation to shareholders in the past three years, representing $1.5 billion in fully franked dividends. New Hope is likely to continue to pay fully franked dividends for the foreseeable future while retaining the flexibility to buy back shares if circumstances warrant it.

19.97 percent interest in the ASX-listed Malabar Resources

During FY24 New Hope increased its equity stake in Malabar Resources Limited to 19.97 per cent. This is the maximum takeover threshold beyond which New Hope cannot acquire any more shares in Malabar Resources unless it makes a take-over offer to all shareholders for the remaining shares of the company that it doesn’t already own. Malabar Resources is a low-cost, long-life, metallurgical coal producer that exports high-quality metallurgical coal so it is perfectly aligned with New Hope’s strategic plans. New Hope has the funds and borrowing capacity to acquire at least a controlling stake in Malabar Resources, although management has stated their preference for organic growth.

Low-cost and long-life assets with life-long approvals backed by a strong industry outlook

New Hope acknowledges that the world is transitioning to a decarbonised economy over the coming decades and that the overall mix of coal in the global energy mix is in long-term decline. However, coal the high energy content which New Hope produces, will continue to play a vital role in providing a reliable and secure energy supply as the energy transition occurs. This outlook means that New Hope can continue to responsibly operate its coal assets for their approved lives. In the interim period, the price for high-quality coal is likely to be sustained at or above historical averages, boosted by the structural shortfall of supply.

Despite ongoing investments in renewable energy, coal remains stable in the world’s energy mix, with demand outstripping supply due to lengthy approval processes for new production sites. Global coal demand is at record levels, particularly from India and China for steelmaking, and although Chinese steel demand has softened recently, its large population ensures sustained coal demand for decades. Additionally, significant steel demand will arise from the need to build out power grids for the clean energy transition.

The combination of these supply and demand factors indicates that New Hope shareholders can look forward to fully franked dividends paid from a consistent earnings stream from ongoing demand for high-quality coal that remains in short supply.