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Golden Energy and Resources H1 net profit up 32.4% to US$16.5m

INTERNATIONAL coal mining and trading company Golden Energy and Resources (Gear) reported net profit of US$16.5 million for the first half of the year ended June, up 32.4 per cent from net profit of US$12.5 million in the year-ago period. 

Gear’s earnings per share for the period was lifted to 0.7 US cent from 0.53 US cent last year. 

The group booked “record first-half revenue” of US$593.5 million, some 18.6 per cent higher than US$500.4 million in the corresponding period last year as the company’s production volume surged 31.7 per cent to 16.5 million tonnes from 12.6 million tonnes in H12019. 

Gear’s coal mining division saw its revenue increase 26.8 per cent to US$574.2 million on the back of higher sales volume of thermal coal, as well as revenue contributions from metallurgical coal, following its acquisition of a controlling stake in Stanmore Coal that was completed on April 2. 

Gear had disclosed that following its takeover bid, its subsidiary Golden Investments (Australia) now holds a 75.33 per cent stake in Stanmore Coal. 

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Although the average selling price of thermal coal fell 6.8 per cent to US$33.38 per tonne for the first half of the year, Gear’s coal mining segment was able to offset this with a 32 per cent increase in sales volume to 16.7 million tonnes. 

Gear also said that it had kept a tight control on cash costs for its coal mining division, lowering costs from US$22.53 per tonne compared to US$23.56 per tonne in H12019. 

The company’s coal trading division, however, reported a 62.5 per cent decrease in revenue to US$17.1 million due to lower sales volume and average selling prices. 

Revenue from non-coal businesses increased by US$300,000 to US$2.2 million as the group recorded dividend income from its shares in Stanmore Coal before it became a subsidiary of the company. 

Gear has also further diversified into the gold industry with the acquisition of the Ravenswood Gold mine in Queensland, Australia. The company said Ravenswood’s gold processing facility has a capacity of up to five million tonnes per annum, and is able to support “large scale, low cost and long term production”.

The company’s cash and cash equivalents stood at US$220 million as at end-June. 

Gear will not be paying a dividend for the period under review, compared to an interim dividend of 0.29 Singapore cents declared in the year-ago period. 

Looking ahead, the company says that it remains cautiously optimistic on the near to medium-term outlook recovery for thermal and metallurgical coal demand and prices.

Gear's group chief executive Fuganto Widjaja said that while the coal mining industry is inadvertently set to face challenges due to global efforts towards renewable energy, developing countries in the South Asia region continue to depend heavily on coal for their energy needs.

Commenting on the group’s recent acquisitions, Mr Widjaja added: “Following the transformation towards a more diversified portfolio in terms of geographical locations of our assets and types of products, we now turn our focus towards optimising our mining operations, including proactive management to minimise operating costs.”

The counter ended the day unchanged at 16.4 Singapore cents. 

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