Took a position in New Hope this week, with the share price under $4. @PhilO I agree with much of what you have said. This is a magnificent business -- perhaps a little boring/big for me as a typical small cap investor -- but history supports that boring businesses can be the best ones.

For transparency, my satellite portfolio is where I keep my smaller (market cap) positions. This doesn't fit the bill for that. I have been wanting to buy New Hope for well over a year now for my super portfolio (typically consists of my larger cap holdings like Codan, Jumbo, MinRes and the like). New Hope finds a home amongst those.

Thesis: relates to their growing output, lowering costs and top class management team.

The industry for obvious reasons is unpopular and outdated, and we shouldn't see any new investment into coal mines outside of the key few existing players. On that note, New Hope are one of a very small few coal players that are seeking to increase production. Coincidentally this probably means New Hope won't trade at a premium, but I expect them to spit out loads of cash over the next few years and continue to benefit from a lack of widespread investment in the sector and a slow-to-innovate federal government. I don't like the fact we are so reliant on coal as a country, but this doesn't change the fact that we are.

In FY25, New Hope's saleable output was 10.7m tonnes. Conservatively, this will increase a few million tonnes over the next few years. With rising production and operating leverage kicking in as they grow/expand, dividends are likely to be well supported. But that relates to the current market position where coal prices are in the toilet (having decreased) and most competitors are struggling to make a buck -- all while New Hope continue to print cash, with output growing and costs expected to continue to decrease. Consequently, with a net cash position of around 450m, risk is very low here, but there is plenty of blue sky opportunity ahead with any subsequent improvement of the cycle or supply issues. In the meantime, let's assume a 10% fully franked dividend yield (or similar) while I wait for said blue skies. Not bad, right?

Perhaps strategically, this is also a bit of a hedge in an increasingly expensive market. That said, I still expect this to deliver market-beating returns.

Valuation wise, a trailing PE of 8x seems reasonable to me. Without any major hiccups in terms of risks (mentioned below), my DCF returned a share price in excess of $7.00 using various scenarios. As above, i think New Hope is attractive at these levels.

Risks include infrastructure and weather related events, regulatory/environmental risk and commodity volatility.

Disc - held

I'm really not excited about mining, particularly coal mining and I get the ethical concerns. But seriously, the relative value here at the moment compared to other parts of the market is too high to ignore.

Take New Hope: it currently pays what looks like a relatively sustainable dividend yield of around 10%, even with coal prices subdued. Production is set to double, backed by proven management and it has a sensible balance sheet.

I think investing is about breaking one's rules selectively..Looking at valuations in other parts of the market, this is one of those times.

Underlying EBITDA5 of $93.4 million for the quarter, a 39.9 per cent reduction from the previous quarter driven by lower sales volumes at Bengalla Mine, which were impacted by logistics constraints and significant weather events in the Hunter Valley. >>>>>>>>>> so next quarter i expect a good result!!!

Highlights1 •

Twelve-month moving average TRIFR2 was 3.22 at the end of the quarter, an improvement from 3.65 at the end of the previous quarter.

• Group saleable coal production of 10.7Mt for the 2025 financial year, 18.1 per cent higher than the 2024 financial year, and within guidance range, following a strong operational performance at New Acland Mine.

• Bengalla Mine achieved an FOB3 cash cost (excluding state royalties) of $76.5 per sales tonne for the 2025 financial year, comfortably within guidance range and a reduction of 1.7 per cent on the previous financial year.

• Average realised sales price of $131.3/t 4 achieved for the quarter, an 11.0 per cent decrease from the previous quarter driven by lower API-5 index pricing and a larger proportion of highash sales in order to manage contractual commitments and stockpile balances.

• Underlying EBITDA5 of $765.8 million for the 2025 financial year.

• Underlying EBITDA5 of $93.4 million for the quarter, a 39.9 per cent reduction from the previous quarter driven by lower sales volumes at Bengalla Mine, which were impacted by logistics constraints and significant weather events in the Hunter Valley.

• Cash generated from operating activities was $570.8 million for the 2025 financial year, with available cash6 of $707.3 million as at 31 July 2025. 

Grossed up Dividend yield: 13.51% which is very nice at $4.33 ..which is close to my purchase price!!

But the Free cash flow looks to be digressing so this is Hold or Sell for me.

3yr return incl dividend is 11%pa