Coronado Global Resources, a prominent coal miner operating in Australia and the U.S., remains optimistic about the market outlook for the second half of the year. The company’s Chief Financial Officer, Gerhard Ziems, has revealed that they are considering potential cash returns to shareholders. These returns will depend on various factors, including the exploration of possible acquisitions.
Notably, Coronado disappointed investors with its midyear dividend payout of 0.5 cents per share, significantly below market expectations. This figure marks an 85% decrease from the previous year’s dividend of 7.5 cents. Consequently, Coronado’s shares experienced a notable decline of over 10% during afternoon trading in Sydney.
Despite this, Ziems has assured shareholders that further dividend payments have not been ruled out. However, the company emphasizes the need for caution and balance when considering these payments in light of other financial commitments and potential investment opportunities.
Coronado has previously expressed interest in acquiring mines that larger competitors have put up for sale. For instance, they have shown interest in purchasing the Blackwater and Daunia coal mines, currently owned by a joint venture between BHP and Mitsubishi Corp. in Queensland, Australia. However, when asked about the bidding process for these assets, Coronado’s CEO, Douglas Thompson, refrained from commenting.
Ziems also mentioned the company’s commitment to reviewing various growth projects, both organic and inorganic. With these considerations in mind, Coronado aims to strategically position itself for future success.
Overall, Coronado Global Resources remains positive about the second-half market outlook, emphasizing its potential for growth and development through acquisitions and careful financial planning.
Strong Balance Sheet and Commitment to Shareholders
Coronado Mining remains steadfast in its commitment to shareholders by allocating 60% to 100% of its free cash flow towards them. The company’s balance sheet is robust, and any investments will contribute positively to its cash flow. As of June 30, Coronado reported net cash of approximately $192 million, marking a 12% increase from the previous year. Additionally, it has an impressive available liquidity of $534 million.
Optimism Towards Coal Demand and Prices
Despite the relatively subdued steel markets, Ziems, the director of Coronado Mining, maintains an optimistic outlook regarding coal demand and prices in the upcoming months. He anticipates a strengthening of Indian demand as the monsoon season comes to an end. Furthermore, efforts to stabilize China’s real-estate market are expected to stimulate more steel demand. Ziems emphasizes that these factors should lead to an imminent increase in the met-coal price.
Price Performance Above Market Average
Coronado Mining reported an average price of $293.80 per metric ton during the first half of the year, representing a 37% decrease compared to the previous year. This decline can be attributed to increased supply, especially from Australian miners. However, it is worth noting that the average price still surpasses the market’s long-run average of $192 per ton. Ziems affirms this positive performance and attributes it to the company’s resilience and ability to navigate market fluctuations.