New Hope cashes in

The huge surge in coal prices over the past 18 months has delivered a massive windfall for New Hope Corporation and its majority shareholder Washington Soul Pattinson (WSP), following the sale of the New Saraji coal deposit for $2.45 billion.

The buyers of the deposit, a joint venture between BHP Billiton and Mitsubishi, relinquished the lease in 2002. It was then picked up by New Hope, which has since spent money on firming up the resources, which now stand at 690 million tones.

The sale came after an auction process conducted by Chris Photakis, of Pitt Capital Partners, which is partly owned by WSP and is likely to book its biggest ever fee from the transaction.

Because of the WSP connection, Pitt Capital has been a long time advisor to New Hope, right back to its $286 million IPO in 2003. New Hope is now valued at more than $4 billion after a 15 per cent jump in its share price this morning.

Pitt Capital also advised on the $48 million purchase of its strategic stake in coal seam gas producer Arrow Energy in 2006 and the sale of its international coal assets in 2005 for $511 million.

Some of the money will be used to increase the capacity of its New Acland mine and upgrade port facilities, but most could be returned to shareholders, with New Hope and WSP chairman Robert Millner flagging a “capital management” program.

New Hope, which describes itself as a “carbon energy” company, also owns the Rosewood coal mine and has a 17.7 per cent stake in coal seam gas methane producer Arrow Energy.

BHP and Mitsubishi were one of more than two dozen firms that expressed an interest in New Saraji. The final offer nearly doubled some analyst expectations.