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Bathurst withholds dividend citing court action, plans buyback

Tuesday 28th August 2018

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Bathurst Resources has opted not to pay a final dividend and will instead retain the cash in case it has pay a US$40 million performance fee to the former owner of its Buller permits.

The company, which today reported stronger than forecast full-year operating earnings, said directors chose not to pay a dividend in the light of the “adverse” judgment of the New Zealand High Court, which backed the claim for payment from L&M Coal.

“The cash will be held in reserve and will be distributed later once more certainty is gained post-appeal,” the Wellington-based miner said in a statement on the ASX.

Instead the firm has said it will buy back up to 75 million of its shares during the coming 12 months at no more than a 5 percent premium to closing prices. The programme may cost about A$11.3 million, assuming a 15 cent share price, Bathurst said.

Bathurst shares haven’t traded above 15 Australian cents since mid-August. They dropped 17 percent when the court’s decision was released on Aug. 20 and traded earlier today at 11 cents.

The ruling relates to Bathurst’s 2010 purchase of L&M’s permits in the Buller region for an export coking coal venture. That hasn’t proceeded, but production from the acreage – albeit sold into the domestic industrial coal market – has triggered the first of two US$40 million payments, the High Court ruled. The company has appealed the decision to the Court of Appeal and has sought a stay of execution of the judgment.

Bathurst is New Zealand’s biggest coal miner. As well as the Buller assets, it operates the Canterbury and Takitimu mines.

Last September it completed the purchase of the Stockton coking coal mine and the Rotowaro and Maramarua thermal coal mines in the Waikato from former government-owned miner Solid Energy. Those assets were acquired through its 65 percent interest in the BT Mining venture it formed with food processor Talley’s Group.

Today the company reported a net profit of $5.55 million for the year ended June 30, from a $15.7 million loss the year before. Revenue increased 15 percent to $47.8 million.

Bathurst cited strong export coal prices, new domestic coal contracts and good cost control for the improved earnings.

Operating earnings, before interest, tax and changes in financial instruments jumped to $45 million from $312,000 the year before.

That included almost $43 million Bathurst booked as its share of the profit from BT Mining’s 10 months of operation. The firm’s cash flows were boosted by a $13 million dividend from the venture.

Bathurst considers BT to be a joint venture between it and Talley’s, given unanimous agreement is required on major decisions.

On a consolidated basis – with 100 percent of Bathurst and 65 percent of BT Mining – revenue for the year was $237.1 million and ebitdaf was $93.7 million.

Bathurst previously reported production of almost 2.07 million tonnes for the June year, including BT’s output. Bathurst’s share was 1.5 million tonnes, including 374,000 tonnes from its wholly-owned South Island domestic coal business.

Bathurst said the Stockton export mine delivered ebitda of $109.1 million and beat sales and production budgets. While the company expects a modest increase in production in the current year, lower prices are expected to deliver earnings of between $62 million and $73 million.

The Waikato domestic business, also 65 percent owned through BT Mining, delivered ebitda of $34.3 million. The South Island domestic business, wholly-owned by Bathurst, delivered $16.7 million of earnings.

Bathurst said the current year budgets for both businesses assume steady state operations.


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