The reporting season rolled on Thursday with half-yearly results out from three of the local mining fraternity: South32 (ASX:S32), goldie Evolution Mining (ASX:EVN) and a foregrounded beauty from Whitehaven Coal (ASX:WHC).
As it had forecast in January, Whitehaven Coal (ASX: WHC) yesterday confirmed a record net profit of nearly $1.8 billion for the six months to December and a sharply higher payout to shareholders, thanks to that surge in thermal coal prices in the wake of Russia’s invasion of Ukraine a year ago.
In its December quarter and half year production report in mid-February, Whitehaven forecast it was expecting to report a monster profit on record sales with only the dividend’s size to be settled.
That came in yesterday’s interim results, along with confirmation of a record after tax profit of $1.78 billion, up 423% from a year earlier.
The interim dividend was set at 32 cents per share fully franked – up 300% from a year ago.
Earnings before interest tax depreciation and amortisation (EBITDA) jumped 319% to a record $2.65 billion.
The figure was helped by an average realised coal price of $A553 per tonne – up 173% from $A202 per tonne in the prior comparable period, and a 4.8% increase in production to 8.8 million tonnes (on a run of mine basis) as weather conditions (rain and flooding) eased in the final months of 2022.
That boosted revenue for the six months to a record $3.8 billion.
In something of an understatement, CEO Paul Flynn said the company had performed well despite ongoing challenges.
“In the first half of FY23, global energy shortages continued to underpin strong pricing. Weather related production constraints in New South Wales contributed to tight supply,” Flynn said.
“Prices for high quality, high-CV (calorific value) coal held at very high levels during the half year and our customers remain focused on energy security as a key priority.
“Despite weather interruptions and ongoing labour constraints, the business performed well operationally. Our Narrabri underground mine delivered a strong operational performance and our safety results continued to improve.”
Looking ahead, Mr Flynn said that demand for high-quality seaborne thermal coal remains strong, “and while we have seen some cyclical price softening moving into the second half of the year, we expect that high-CV coal prices will continue to be well supported throughout 2023.”
“We are focused on maximising margins and meeting production and sales guidance for FY23. At the same time, we are progressing plans for our Vickery and Winchester South development projects, including completing our assessment of a staged approach of the Vickery development to bring on smaller volumes sooner to help meet the strong demand.”
Whitehaven said that it was heading into 2023 flush, with cash on hand totalling $2.5 billion at December 31, up from $1 billion at June 20. If Whitehaven can get a 4% deposit rate from its bank, that’s around $100 million in interest on a pre-tax basis. alone.
Despite a slide in revenue and earnings and a lowered dividend for the six months to December, South32 (ASX: S32) has topped up its share-buyback program by $US50 million on expectations of a stronger outlook for commodities in the six months to June.
South32 said on Thursday in its December half release that the increase to the buyback will lift the amount left on its program to $US158 million which it plans to return to shareholders by September, the end of the first quarter of its 2023-24 financial year.
(The $US50 million increases takes the total in the program to $US2.3 billion, most of which has been returned.)
Meanwhile, directors of the mining company declared an interim dividend of 4.9 US cents per share. That’s down sharply from the 8.7 cents per share paid for the six months to December, 2021.
The company revealed that net profit of $US685 million for the six months through December, slid 34% from a year earlier while underlying earnings dropped 44% to $US560 million (from $US1 billion), although underlying revenue edged up by 0.4% to $US4.52 billion.
“A combination of a decline in commodity prices from record levels in many markets, and higher inflation and uncontrollable costs, more than offset the benefit of our strong operational performance,” the company said in Thursday’s statement.
First-half earnings were hit by softer commodity prices, higher inflation and uncontrollable costs, but easily topped market forecasts for underlying earnings of $US493 million.
CEO Graham Kerr said the increase to South32’s capital-management program reflects the miner’s strong financial position and confidence in the business outlook.
Metals prices have recently rebounded toward last year’s highs, lifted by China’s economic reopening after years of strict pandemic controls and low global supplies, he pointed out.
“Commodity markets have strengthened, leaving us well placed to capitalise on planned production growth and lower operating unit costs expected across the majority of our operations in the second half of the 2023 financial year,” he said in the earnings statement to the ASX.
South32 enjoyed a 12% increase in copper-equivalent production in the December half and expects total group output to grow a further 6% in the six months to June.
The shares rose 0.8% to $4.66.
A 33% dividend cut from gold miner Evolution Mining (ASX: EVN) offset news of an 11% rise in statutory profit for the six months to December of $103 million.
Evolution knocked its shareholder payout to 2 cents per share (fully franked) from 3 cents a year ago which allowed it to boast that it had paid its 20th consecutive dividend to shareholders since 2013 (which have totalled more than $1 billion).
Investors weren’t all that impressed with the news of the smaller, but continuing dividends to shareholders and sent the shares down nearly 2% to $2.97.
They were not happy with how a 26% jump in revenues to $1.132 billion, turned into just a 11% rise in profit, or 2% on an underlying basis ($103 million vs $100 million for the December, 2021 half year).
The 13% rise in EBITDA for the half to $446 million from $393 million, was also well short of the solid rise in revenue.
Evolution said its operating costs were “being well controlled in the current inflationary environment.” Total gold production was 327,502oz at an All-in-Sustaining Cost of $A1,307/oz.
The company said it had a strong liquidity position with cash of $313 million (down from $574 million a year earlier) and liquidity of $838 million, including the additional revolver (loan) of $525 million, effective from October 13, 2022 and after scheduled debt repayments of $85 million.
The company said its mineral resources at December 31 were estimated to contain 30.3 million ounces of gold and 1.8 million tonnes of copper – “an increase of 724,000 ounces of gold (2%) and 322,000 tonnes of copper (22%) compared with the estimate as at 31 December 2021.”
“Ore Reserves estimated to contain 10.0 million ounces of gold and 661 thousand tonnes of copper – a decrease of 360,000 ounces of gold (4%) and an increase of 21,000 tonnes of copper (3%) compared with the estimate as at 31 December 2021.”
“Full year production and cost guidance maintained with the company positioned for a strong second half of the financial year
CEO Lawrie Conway said: “The half-year to 31 December 2022 has delivered strong operating cash flow which reinforces Evolution’s position as one of the lowest cost, highest margin global gold producers.”
“With a significant investment in growth projects at our cornerstone assets, supported by a high-quality Mineral Resource and Ore Reserve base, our business is well positioned to deliver a strong second half.
“We remain on track to deliver Group FY23 production and cost guidance with performance weighted to the second half of the year, which was considered when declaring the interim dividend.
“Evolution’s history of dividend payments with over A$1 billion paid since 2013 demonstrates our commitment to maximising shareholder returns,” he said in the statement.
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