Member Info for dusty42

Apologies if this is a stupid question, but as of the full year results 14th Dec 22, they said they had disposed of all office and leisure assets and were only invested in warehouse. In the same release dividend cover was said to be at 81.2%. We are now half a year later and the dividend cover has slipped to 67.3%.

What has caused this drop in coverage? Increased debt costs?

Agree, but also a low cost producer who has been able to weather lower metal price enviroments previously and still maintain a good dividend. As of last year also debt free, with a strong balance sheet.. last reported at $60m cash I think. And on the hunt for growth opportunities, on which they may also find better deals in a cooling metals market. Longer term, many expect base metals to do alright.

https://www.reuters.com/markets/commodities/coppers-anticipated-supply-surplus-is-proving-elusive-2023-05-10/

The quarter was reasonably decent. And q2 may well be alright as well, helped if some funds come in from Narrabri. In q3 though, how well is the dividend going to be covered with little from kestrel potntially? Debt is presumably going to rise through the year with payments to South32 and possibly further funding for Piaui. They paid down debt with the windfall last yr, but I can help but wonder if they'd have been better of finding something acretive to plough the money into and continued to carry the debt.

Based on the switch to dividends in dollars, as exchange rates stand now this represents a cut to the dividend for UK shareholders. Of course this could change, though many expect further weakness in the $.

I'm glad someone asked the question regarding Narrabri, there is still a significant sum of money apparently due here, though not mentioned at all by the company since the actual divestment(don't say the 'c' word).

I agree that from late 2025 onwards things could be looking quite good. More concerned as to how q2/q3 and beyond may look with possibly little from kestrel. I would say there is very little chance of any rise in dividend at the moment(debt predicted to rise through the year). The first quarter should be pretty solid given met coal prices, but cobalt prices are not where we would wish.

One solution to the 'gap' would be if the company could find a sizeable producing royalty but with limited years of life remaining(hence cheapish). This might be able to act as a bridge to some of the copper assets producing. They have been very lucky with the windfall last year from in particular kestrel, allowing them to reduce debt so meaningfully, but this can't be counted on going forward.

Narrabri South approved. Not sure if that means it's actually likely to produce anything before 2026.
https://whitehavencoal.com.au/narrabri-extension/

But yeah, overall - quite surprising the company doesn't seem to have had any income from Narrabri, gone very quiet on it since the sale announcement at the end of 2021. I wonder given where coal prices have been, how much money it would have made last year if they hadn't been in a rush to sell it.

Hmmm, yes - production and saleable volumes were up c20% at Narrabri in 2022 vs the year before..
https://whitehavencoal.com.au/wp-content/uploads/2022/09/Whitehaven_Coal_Annual_Report_2022.pdf

Further to my last post, they also said in an Oct 21 rns:

"Anglo Pacific will receive $21.6 million in fixed payments, of which ~$13 million is due within 18 months of the transaction close date. The remainder will be received in annual instalments until the end of 2026."

"Contingent payments totalling $5 million, payable in instalments, will become receivable upon the approval of the Narrabri South extension project by state and federal authorities in Australia, prior to 31 December 2026."

"In addition, Anglo Pacific is entitled to receive bi-annual contingent payments linked to future realised Narrabri coal prices ranging from $0.05/t if realised prices exceed $90/t to $0.25/t if realised coal prices exceed $150/t up to the end of calendar year 2026. Assuming Narrabri ROM production of 4.3-5.0 million tonnes for fiscal year 2022 and 7.0-8.5 million tonnes per annum in the southern panels, the Company would be entitled to receive approximately $9 million in price linked contingent payments, were realised Narrabri coal prices to be in excess of $150/t."

Thermal coal has averaged /well/ over £150/t during 2022. Should this not have led to some income? Assuming the mine is actually still operating, which I've not looked into.

On the 31/12/21 the company said(as regards the Narrabri sale):

"The consideration is structured as fixed payments totalling $21.6 million and contingent payments which could generate a further $14million. The fixed payments are to be received in instalments until 31 December 2026, of which ~$13 million will be received within the next 18 months."

The recent results seem to suggest that zero in contigent payments arrived in 2022.. so that would suggest that within the next 5 months they are expecting 'approximately' $13m to come in. Certainly thermal coal prices have been bouyant. Anyone else have knowledge/views on this?

Thanks @OracleofOldham and Just-Another-Bot

Just after I asked I managed to locate the recording on the polymetal website. After having watched it, I am sort of surprised at the reaction in the market over the last few days. I agree the 'possibility' of the loss of the London listing is not great, but they are seeking to avoid this. Whatever happens(barring something bad like assets being siezed or war in Kaz), it seems likely I will still be eligible for any reinstated dividend 'at some point', perhaps this year, perhaps not. Granted in the worst case it may become difficult to trade the shares, but I don't really intend to anyway. I was concerned about the fact I hold the shares in ISA, but loosing the tax benefits would not be the end of the world. And from the post above there is possibility they may convince brokers to not dump holdings out of the wrapper, certainly it appears not against hmrc's rules for them to remian in an ISA/SIPP. It's all complicated.. but probably most people who bought into this share pre or post war did so for the potential dividends going forward.. and those are still on the table. Anyone who bought in since the start of the war, *must* have realised there were considerable risks. My impression is that management are trying to guide the ship on the best course possible, in extremely difficult circumstances.

@ OracleofOldham - do you or anyone else have a link to the call/q&a recording?

My shares are in ISA currently. However it does seem to be about whether HMRC reconise the exchange. And below suggests they do? Though would welcome comment from anyone who knows more about this!
https://www.gov.uk/government/publications/designated-recognised-stock-exchanges-section-1005-income-tax-act-2007/designated-recognised-stock-exchanges-section-1005-income-tax-act-2007-v3

Thanks for responses.. @wakeyinvestor and CleverThoughts

Yeah I could just sell those in the ISA and repurchase outside, but my average is about £3 so from where I stand now I would effectively loose some of my previous ISA allowance. Not a massive deal, but annoying.

Appologies if this has been posted before(it's a couple of months old), but I found it unteresting.
https://www.reddit.com/r/POYYF/comments/z75mye/huzzah_my_quest_for_answers_has_been_successful/

My take on situtation(with somewhat limited knowledge).. is that I'd not be too bothered about what is going on if my fairly modest number of shares were in my trading account rather than ISA.

Thanks for the link to the presentation.

I personally think that concern over the near term outlook given the drop off from kestrel income is having an effect on the current shareprice. Say what you like about the morality of met coal, but kestrel has really dominted the portfolio. I like the copper aquisitions - but there is a bit of a gap between kestrel income decreasing and anything coming in from those. Piaui is also attractive, but again in the very near term it's not likely to be contributing much. be nice to see them aquire something sizeable and already producing, but obviously also hopefully at a good price.

I sold half my holding at £1.80(actually mainly only because I got annoyed that I twice sent the company some questions which they completely ignored), but it's given me a very low average on the holding I have left. I do think the outlook from 2025 is good, but we still need to get there. I may consider adding on weakness though.

I didn't know they were changing the dividend to be $ denominated.

@ otemple, ah yes - in the days I was paying more attention I'd have known that. But thank you for the response.

Prices are 'silly' arguably now, but even higher prices would have a big impact if they caused a larger share of the sale price to fall into the high bracket.

I'd still like to know the situation regarding the crinum royalty, but I emailed the company a couple of times and got no response.

Very good news out of the blue, I am a little confused as to why Mr Lafleche indicates as 75% increase in revenue from the royalty. If the current applicable rate is 15%, and that's changing to 40%(assuming sales values of the coal stay the same), surely the revenue increase is greater?

@ queensland royalty rate changes..

"The Investment Manager is well advanced with the reinvestment of the office sale proceeds and announcements on acquisitions will be made in the normal way as and when contracted."

Sounds encouraging to me, hopefully some more news flow in the not too distant.

Can't vouch for how true this is:

"A Zinc Squeeze is Just Around the Corner. According to media reports, major commodity trading houses such as Trafigura are moving to take large amounts of zinc out of LME-approved warehouses in Asia (with stocks already having fallen 40% this year so far at 127,675mt), stoking fears of another metal squeeze looming."

Does anyone know whether apf still has interests in HZM? At one point, they seemed to have an equity stake of over 20%, plus an option to aquire a NSR(now expired). The only reference I can find from apf about this is(from 2020 results):
"£4m of non-core asset disposals, mainly Berkeley Energia and Horizonte Minerals shares, to majority finance the share buyback"

Nothing is listed on the (current)website as regards HZM so has the entire stake been divested? Given that the Araguaia project now seems to be under construction, was this a bad time to sell down a stake, particularly to fund a buyback? Though hard to know how much it may have been diluted of course. Apf not listed on their major shareholders page.