SINGAPORE (May 15): Golden Energy and Resources (GEAR), the coal mining and trading company, posted 1Q earnings of US$19 million ($26.5 million), up more than 11 times from its earnings of US$1.7 million in the previous year on higher revenue and lower finance costs.
Revenue for the quarter surged 47.9% to US$143.2 million from US$96.8 million previously, mainly due to higher revenue contribution from the group’s coal mining division, which more than doubled to US$129.4 million from US$63.7 million in 1Q16 as average realised selling price grew to US$40.86 per metric tonnes (MT) over the quarter from US$31.53/MT a year ago.
In a Monday filing to the SGX, the group says a better proxy for the majority of its coal quality was the average Indonesia Coal Index 4 in 1Q17, which was US$42.74/MT.
The gain from the coal mining division was however partially offset by lower revenue from the coal trading and forestry divisions, which fell 58.5% and 61% to US$12.6 million and US$0.8 million respectively, both of which were attributed to lower sales volumes.
Other income fell to US$3.4 million from US$25.5 million in the previous year due to a decline in coal purchases, lower amortisation of exploration and stripping cost offset by an increase in mining production.
Finance costs were more than halved to $1.2 million from $3.4 million a year ago as a result of loans settlements that took place in Dec 2016.
As at Aug 31, 2016, GEAR’s coal business which is held by Golden Energy Mines (GEMS), is valued at US$3.1 billion.
The group has an aggregate coal resources estimate of 2,331 MT across its concessions as at end-2016.
“We are highly encouraged by the group’s continued strength in its operational and financial performance, buoyed by strong demand for coal and an increased average selling price. The group anticipates that the outlook for coal will continue to be positive, given an expectation of a supply shortfall, arising from strong demand for thermal coal,” says executive director and group CEO, Fuganto Widjaja, in a press statement.
“Industrialisation and electrification in Asian economies are expected to drive coal demand in both the domestic and export markets. Backed by a healthy net cash position and increased production from our coal mines, GEAR is primed to capitalise on strategic acquisition opportunities should these arise,” he adds.
Shares of GEAR closed 1 cent lower at 42 cents on Monday.
