Ferret' Stock to Watch: CUMNOCK COAL LIMITED 07:55, Friday, 10 December 2004
DIRECTORS TO PAY A DIVIDEND ON BUOYANT OUTLOOK FOR COAL
Sydney - Friday - December 10: (RWE) *************************************
OVERVIEW *********
Shareholders are having a good week after directors decided to pay a 5 cent dividend and market interest switched to the company's progress.
The shares bounded ahead but then settled after a bit of profit taking.
Mr Peter Coates, managing director of Cumnock Coal, said, "The Board's decision to pay a dividend to shareholders reflects our confidence in the buoyant outlook for the coal market, coupled with the company's positive cash position."
You can't get a much better Christmas present than that.
Shareholders will receive their reward on Christmas eve.
Total coal mined for the quarter ended 30 September 2004 was 42 per cent lower than the prior corresponding period as all coal produced during the quarter came from the open cut mine, following the closure of the underground mine in September 2003.
The open cut operations produced 374,186 tonnes in the current quarter compared to 259,095 tonnes (plus an additional 380,591 tonnes of underground production) in the prior corresponding period.
Saleable production was down 23 per cent period on period. Lower ROM (run of mine) production was partially offset by the higher yields from the opencut compared to the combined yields from underground and open cut operations in the corresponding prior quarter.
Total coal mined for the period ended September 30, 2004 was down 51 per cent period on period.
Production from the open cut operation totalled 935,348 tonnes in the period compared to639,975 tonnes in the prior corresponding period, plus an additional 1,257,195 tonnes of underground production in the prior corresponding period.
SHARE PRICE MOVEMENTS *********************
Shares of Cumnock yesterday finished steady at 67c after previously reaching 73c on the rolling high for the year. The low was 20 cents. Dividend is 5 cents to yield 7.46 per cent.
Earlier this year chairman Anthony Clark told shareholders that 2003 was a great year as the company returned to profitability.
This was despite despite difficult market conditions that were characterised by a strengthening Australian dollar and weak coal prices although this has significantly changed through the Chinese influence.
In the light of problems in underground mining directors decided to close the mining operation due partly to geological conditions encountered in mine development that were reinforced by disappointing results from an exploration program in the eastern area.
"In the space of a year your company has successfully transitioned from being an underground mining operation to an open cut operation.
Closure of the underground operation was completed before time and under budget.
BACKGROUND **********
Cumnock Coal Limited was listed on the Australian Stock Exchange on December 1993 so it has plenty of time to get its act together.
It stopped underground mining in September 2003.
Like other coal producers the company has found renewed support as the Chinese market brings the industry to life.
It already has Japanese steel mills as major customers.
Cumnock Coal is an Australia-based company that is primarily engaged in coal mining and associated activities.
It is mainly focused on open-cut mining operations in the Hunter Valley, New South Wales.
It is an open-cut mining operation, under a contract by Roche Mining which produces 1 million tonnes of ROM (run of mine) coal a year.
The coal is mined and processed at the Cumnock operations to produce an export semi-soft coking coal product.
The Cumnock Coal Mine is located in the Hunter Valley about 25 kilometres from Singleton in close proximity to the Liddell and Bayswater power stations and to the Liddell rail loop.
Cumnock holds a 35.6 per cent stake in the Ravensworth Coal Terminal JV, located 2.6 km from the mine which is reopening and being run by Roche.
DISCLAIMER: The view expressed in (Stocks to Watch: RWE News Service) are for information only. RWE is not in the business of providing financial advice. Nothing in this material is to be construed as financial advice. RWE ABN Pty Ltd and Ralph Wragg give no warranty, guarantee or other representation as to the accuracy, completeness of the material. RWE ABN Pty Ltd and Ralph Wragg disclaim any liability for any loss or damage suffered in connection with the material.
