Coal miner New Hope Corporation has unveiled plans to double output over the next five to seven years, as it successfully tackles rising production costs.
The move came after record exports in its past fiscal year despite being without a rail line for 11 weeks due to the Queensland floods.
New Hope on Tuesday reported full year profit of $503.1 million for the 12 months to July 31 from $183.8 million a year earlier, but that was inflated by the sale of stakes in Arrow Energy and the Lenton coal project in Queensland.
Profit before non-regular items fell 20 per cent to $146.9 million despite a record export of five million tonnes.
The company said the profit fall was due to the effects of the floods, a strong Australian dollar and costs of acquiring Northern Energy, which included a coking coal asset.
“The strategy we’ve implemented over the last decade is now paying off dividends in terms of shareholder returns.
“… we have a fantastic development portfolio of projects and the cash balance to fund those,” New Hope chief executive Robert Neale said.
New Hope kept its coal production guidance for fiscal 2012 at six million tonnes and said its Colton coking coal development in Queensland was due to be commissioned at the end of calendar 2013.
The company will pay a final dividend of five cents per share, fully franked, as well as a special dividend of 15 cents per share.
The miner, Australia’s 50th largest by market capitalisation, also cut production costs by between 10 and 15 per cent.
That followed sharp hikes in costs in the previous fiscal year as it boosted volumes to take advantage of strong export demand.
Other Queensland miners including Gloucester, Whitehaven and Macarthur – which New Hope tried to acquire last year – have reported sharp jumps in costs.
Mr Neale denied that the time-frame for doubling production was too ambitious but admitted it relied on government approval.
The company would expand its Acland and Lenton mines and other expansion projects, he said, funded by current cash reserves of about $1.5 billion.
“The base engineering, geological and marketing work is basically done.
“In two years there will be the execution phase,” Mr Neale told AAP.
“The issue we will have on timing will be government approvals and third-party execution of infrastructure projects, rather than project development.”
RBS Morgans analyst Tom Sartor said he doubted New Hope would double production in five to seven years.
“I think the timeframe will be a bit longer. There are a lot of political ramifications in trying to double the amount of coal you put through the leafy western suburbs of Brisbane on rail,” he told AAP.
He said those plans, including a proposed Brisbane port expansion, were “in the works” and New Hope’s result was excellent in a very tough year.
New Hope miners are considering strike action after recently rejecting a 5.5 per cent pay rise offer for this year.
“The workforce are up in arms about the latest EBA (enterprise bargaining agreement) … that might be a good indication where the savings are,” Mr Sartor said.
Shares in New Hope gained seven cents, or 1.37 per cent, to $5.17 as the broader market declined.
