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Stanmore Coal releases FY17 results

Published by
World Coal,

Stanmore Coal has reported a net profit of AUS$12.05 million for the year ended 30 June 2017.

The key highlights of the FY17 performance were:

  • Revenue of AUS$137.7 million up from AUS$12.7 million pcp.
  • Gross profit of AUS$30.8 million increased from a gross loss.
  • Underlying profit before tax AUS$9.2 million increased by AUS$15.0 million from a loss of US$5.8 million pcp.
  • Net cash of AUS$11.9 million was stable while building pre-strip and coal stockpiles by AUS$22.4 million.
  • Working Capital Facility of AUS$22.0 million. Om extended by two years to November 2019 and converted into a revolving facility.
  • No dividend declared for FY1

    FY17 production results demonstrate continued improvement at the Isaac Plains Complex following the restart of the mine in 2016. Key highlights include:

    • Achieved product coal guidance, producing 1.204 million t.
    • 22.3 mbcm of overburden moved at a strip ratio of 13.4x, down from 13.7x in the pcp.
    • Significantly improved performance in 2H FY17 with opencast ROM t increasing from 600 kt in 1H to 916 kt in 2H.
    • Total Reportable Injury Frequency Rate for the year was 12.46 per million hours.
    • Improvement in yield by 3.1%, with a 14% improvement in metallurgical coal product mix from the prior year. Due to mining through a highly faulted zone in FY2017, the metallurgical product mix is expected to marginally improve from 75% in FY17.
    • 258 kt of product coal stockpiles at 30 June 2017 (resulting from Tropical Cyclone Debbie (TC Debbie) infrastructure delays) impacted on full year sales to only 1.02 million t.
    • State royalties of AUS$11.11/t.
    • The company renewed 800 kt of metallurgical sales contracts with Asian customers during FY2017 for the following Japanese Fiscal Year 2017. These renewed contracts include an improvement in pricing relativity to the Hunter Valley Benchmark for semi-soft coking coal of approximately US$1.15/t, to an average discount of US$0.625/t.
    • The average sales price achieved during the year was US$104.9/t, increasing from US$60.4/t in the pcp.
    • Isaac Plains East progressed by finalising negotiations with landholders, allowing the public notification process to be triggered. Targeted potential first coal production at Isaac Plains East is 4Q18, subject to no objections during the public notification process and timely processing of the approvals.
    • Outlook


      The continued improvement in mining and yields supports the Company’s FY18 guidance of 1.2 million t product tonnes (noting the 1.2 million t in FY17 included 125 kt of highwall mining tonnes which will not continue in FY2018). The operations will continue in Isaac Plains until the Isaac Plains East extension is approved and constructed.

      During FY18 the dragline will undergo a planned shutdown. The mine has built considerable ROM and product stockpiles during FY17 and the first months of FY18 to minimise any impact of the planned shutdown.

      FY18 Projected unit costs are expected to reduce to AUS$100/t, from approximately AUS$110 per t in FY17, through the adoption of a conservative pricing curve (particularly impacting royalties), cost saving initiatives implemented by the Management team and in addition to higher sales in FY18 (lower unit costs) to deplete the 258 kt of product coal inventories on hand at 30 June 2017.


      The Isaac Plains East project has progressed to the Bankable Feasibility Study (BFS) stage following the completion of the drilling program (also for JORC purposes) and the alignment of the mine plan against the Environmental Authority conditions. Detailed work on capital estimates, production sequencing and final environmental studies are underway and should align generally with the potential completion of the public notification period. It is forecast that, subject to no objections being received, the mining lease and environmental authorities could be granted in 2Q18. The project is fully funded via either the recently extended financing facilities or company generated cash.

      Market and Pricing Continued upward pressure on coal prices during 2017 provides the Company with an optimistic outlook for coal prices during FY18. The 1Q18 benchmark Hunter Valley semi-soft coking coal price was set at US$126/t, with the 2Q18 benchmark price expected to be settled shortly. The company is well positioned to benefit from the strong outlook for metallurgical coal prices in H2 FY18 with available coal stocks at 258 kt at 30 June 2017, and continued improvements in mining performance projected.

      Stanmore Managing Director, Dan Clifford, said the progression from an acquisition of an asset on care and maintenance in the previous year into a reliable, safe and consistent producer of metallurgical coal has positioned the company well to generate cash from existing operations and continue the development of the Isaac Plains Complex into an asset of significant value for our shareholders. “The business results stemming from investment into efficiency improvements, control and operational performance has demonstrated the validity of the investment plan. The coming together of the company’s team, our contract partners and stakeholders has resulted in the company achieving our production and cost guidance targets for the year” “Now with our sights set on the future, the performance of our team and the asset will enable the company to identify and execute further value accretive opportunities. With an underpinning core value of ensuring our people, and that of the environment, health and wellbeing are protected, our focus is very clearly set on fully utilising the assets we have in hand” “Bringing on of low cost production from Isaac Plains East and other coal source opportunities to fully feed our infrastructure will create significant value. With this, we are positioned well in the metallurgical coal arena with favourable market conditions and a strengthening balance sheet”

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