Yancoal Australia Ltd (ASX:YAL) has cancelled its interim dividend as the coal company seeks to boost cash reserves with a view to acquiring new coal assets.
Yancoal CEO David Moult said the company was particularly interested in picking up metallurgical coal assets to complement its existing portfolio, which includes premier thermal coal mines in Australia.
Moult highlighted how the strategy aligned with previous successful acquisitions, such as its US$2.45 billion purchase of Coal & Allied from Rio Tinto (ASX:RIO) in 2017.
The decision to withhold interim dividends, however, sparked investor dissatisfaction, leading to a notable share price decline.
Despite this, Moult underscored Yancoal's robust financial position, debt-free status and readiness to execute significant transactions. He remained cautious about divulging specific financial commitments but expressed a clear preference for metallurgical coal assets over thermal coal.
Yancoal reported a substantial decrease in first-half profits, largely attributed to lower coal prices globally. Despite revenue dropping by 21%, the company managed to reduce production costs per tonne through operational efficiencies and cost-cutting measures.
Looking ahead, Yancoal plans to explore expansion opportunities within its current assets, particularly through potential brownfield developments. The company anticipates a stronger second half of the year in terms of production and aims to further reduce operational costs.
The upcoming months will likely prove critical as Yancoal navigates financial pressures and strategic growth opportunities in the competitive coal market landscape.