Coal miners GEO ENERGY and GOLDEN ENERGY report sharply higher profits

Two major coal miners listed on SGX reported sharply higher 2016 profits, ending a losing streak on the back of strong production volumes and, just as importantly, a rebound in coal prices.

US'000 2016 2015 +/(-) % Revenue 182,109 18,209 900 Gross profit 41,918 3,144 n.m Net profit from continuing ops 23,537 (7,355) n.m. Geo Energy Resources: Its 4Q2016 net profit was the highest quarterly earnings reported since its listing in 2012, lifting FY2016 profit from continuing operations to US$ 23.5 million. Geo Energy delivered 2.4 million tonnes of coal in 4Q2016, exceeding its target of 1.8 million tonnes and bringing FY2016 sales of coal to 5.5 million tonnes. Geo Energy CEO Tung Kum Hon with analysts. NextInsight file photo. As a result, its full year revenue reached US$ 182.1 million. Its average cash profit was US$ 13.86 per tonne in 4Q2016. Geo reported strong operating cash flow of US$49.7 million in 4Q2016, resulting in a year-end cash position of US$ 67.7 million. The coal miner noted signs of sustained uptrend in coal prices, with 24 February 2017 ICI 4200 GAR at US$ 43.97/tonne. It reiterated production and delivery target of 10 million tonnes of coal for FY2017. It proposed its first dividend since IPO of S$0.01 per share, which translates into a yield of about 3.3% based on a recent stock price of 30 cents. For more information, see press release here.

Golden Energy and Resources (GEAR): It swung back to record a net profit of US$33.7 million in 2016, compared to a net loss of US$8.7 million in 2015. Profit attributable to shareholders is US$22.3 million.

2016 was the first year in which GEAR had accounted for the complete year’s financial performance of PT Golden Energy Mines Tbk (“GEMS”), which it acquired in April 2015.

GEAR said it recorded higher sales volume of coal as the average realised selling price rose from US$32.89 per ton in 4Q2015 to US$38.68 in 4Q2016.

GEAR is seeking to produce 14 million tonnes of coal this year. Photo: Company In FY2016, GEAR produced 9.5 million tonnes of coal.

Of this, 7.5 million tonnes were mined from the Group’s largest concession, PT Borneo Indobara (“BIB”), the maximum output limit approved by the Indonesian Government in September 2016.

For 2017, GEAR has sought approval from the government to raise BIB’s coal production to 12 million tonnes.

If given the green light, GEAR will be on track to achieving its total target volume of 14 million tonnes this year, with 2 million tonnes coming from its KIM concession.

Mr. Fuganto Widjaja, Executive Director and Group CEO of GEAR, said, “With GEAR in a net cash position, we are poised for strong organic growth in production from our coal mines, as well as to look at additional strategic acquisitions which would be earnings accretive to the Group.”

For more information, see press release here.