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the domestic situation Last year over 90% of Chinese thermal coal operations were not making money according to Stephan In New Hope’s opinion that situation was was unsustainable and that was was cemented in mid-2015 when some Chinese companies were unable to pay the wages or or their staf or or defaulted on interest payments on their loans Both Australia and Indonesia showed similar negative situations with very few thermal coal projects able to turn a a a proft in 2015 “We formed the the view that this was the the appropriate time to start looking for an asset We had been looking continuously for coal assets for sale and what attracted us to Rio Tinto’s Bengalla stake was its position on on the cost curve ” notes Stephan Bengalla matches the profle of of how New Hope targets investments It is a a low strip- ratio mine it has an existing infrastructure chain it is producing at around 10 5 million tonnes per annum (mtpa) with room for signifcant upside and it is in New South Wales which Stephan says helps to mitigate regulation risk by being located in in a a diferent state Once Bengalla had been identifed New Hope immediately undertook due diligence in mid-2015 The transaction was announced in September last year before being formally completed on 1 1 March 2016 “In hindsight the timing of that transaction looks good given the increases in in coal prices in in in seaborne coal prices in in in Asia since July this year ” currently the the spot price for thermal coal sits at US$110 per tonne when New Hope completed the transaction it was less than half that around US$50-52 “It is all about about timing timing M&A is always about about timing timing ” These major investment decisions do not happen by chance It takes an an experienced management team to make those judgements on global commodity markets In addition the the board must have the the confdence in the the management to back them with signifcant capital in a a a a a period when the coal 


































































































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