And it expects more of the same in 2009: “Significant earnings growth should continue in the 2009 financial year as coal prices are expected to remain strong, supported by the company’s incremental mine expansions and extensions,” the company told the ASX yesterday.

2008 sales, earnings, production, exports and profits were all higher, as are payments to shareholders, including Soul Patts, which reports its full year figures tomorrow.

Operational net profit after tax rose 30.8% to $90.7 million for the 2008 financial year, after a 16% increase in saleable coal production to 4.45 million tonnes,

Exports rose 24% to 3.2 million tonnes as prices rose for exports and domestic coal shipments.

The company said there was also a higher contribution from a record year of coal throughput at the Queensland Bulk Handling facility at the Port of Brisbane, which became a wholly owned subsidiary of New Hope in August last year.

New Hope has declared a final dividend of 3.5c per share, a 40% increase on the previous year, and a special dividend of 8c per share, a 166% increase on the previous year.

Both dividends will be fully franked. Earnings per share increased by 30.2% to 11.2c.

That special dividend will total some $600 million (very tasty for Soul Patts) and will be paid in November.

Now it says it is evaluating options to increase coal output, including re-opening an old mine, to take advantage of higher export prices that drove the 2007-08 result.

The result was in line with guidance provided in August of an expected profit range of between $88 million and $91 million.

New Hope says it has re-started mining at its Jeebropilly mine, which the company closed in 2007, and is also evaluating mining remnant coal at its New Oakleigh mine to take advantage of the high export prices.

“While the known coal reserves at our New Oakleigh mine near Ipswich are likely to be exhausted in 2009, the current high export coal prices may make it economical to mine any remnant coal currently being evaluated, even with high operating costs,” chairman Robert Millner said in a statement with the results.

“These are low risk projects that allow New Hope to take further advantage of the current export demand for coal.”

New Hope sees output rising 10% this year to 4.9 million tonnes, from 4.451 million tonnes last year.

Revenue in the year to July 31 jumped 32.6% to $329.79 million.

New Hope supplies thermal coal - used as fuel for power stations - to a range of domestic and export customers.

The company recently completed the sale of its New Saraji coal project to the BHP Billiton Mitsubishi Alliance (BMA) for $2.45 billion earlier this month. It paid considerably less for the prospect several years ago.

Mr Milner said the sale of the New Saraji project did not contribute to the result. The proceeds would allow New Hope to continue its significant capital expansion programs.

“We will be able to continue to expand our New Acland mine and expand the QBH facility to handle the expected industry requirements from South East Queensland.

“The sale also allows us to pay a fully franked special dividend of about $600 million in November 2009,” he said.

For all the good news, the market wasn’t impressed and the shares fell 6c to 4.40.

South Africa-focused Lonmin swiftly rejected the bid yesterday as its shares soared 51 per cent to a high of £35 ($75), slightly over Xstrata’s planned offer of £33 a share, implying investors see scope for a sweetened bid.

Lonmin shares, which had shed 36 per cent since May 19, closed up 47.7 per cent at 34.26 pounds.

Anglo-Swiss Xstrata’s swoop is part of a wave of consolidation in the metals sector amid booming demand from China that has sent prices soaring over the past few years.

Five months ago, Xstrata escaped being bought when a takeover attempt by Brazil’s Vale failed.

Xstrata bought an 8 per cent stake from several major shareholders after the close on Tuesday and purchased more shares yesterday, bringing its stake to 10.7 per cent.

Lonmin rejected the bid as undervaluing the firm. “This is an opportunistic and entirely unwelcome attempt to acquire Lonmin at a price which undervalues its unique assets,” the company said.

BlackRock fund manager Graham Birch, a major Lonmin shareholder, said: “It’s a bit opportunistic because all the mining shares have been so battered in the last six weeks or so.”

“Obviously Xstrata has taken advantage of market weakness. Mining shares have got so ridiculously cheap. I suppose it’s not impossible there will be bids for others.”

Xstrata would fund the bulk of its $US10 billion offer through bank debt and chief executive Mick Davis said he expected little problem in sealing the financing considering the number of messages from bankers he had received yesterday  morning.

Sector shares

Xstrata’s move spurred gains in other mining shares as investors bet that other companies would take advantage of more reasonable valuations after mining shares lost around a third over the past three months on worries about a global slowdown.

The UK mining index gained 3.3 per cent and Anglo American, around which takeover speculation has swirled, added 3.2 per cent.

Shares gained 2.4 per cent in sector number one BHP Billiton in the midst of a $US150 billion takeover bid for number two Rio Tinto, which rose 2.4 per cent.

Platinum prices also got a boost from Xstrata’s move, jumping more than 3 per cent, since it showed confidence in the metal’s future, traders said. Over the past few months platinum prices had fallen by a third from a record $US2290 in March.

Xstrata said it had the expertise to turn around the South African mines owned by Lonmin, which has repeatedly cut its production targets due to operational problems, smelter difficulties and power shortages.

Lonmin cut its 2008 sales target for the third time yesterday , slicing off another 6.5 per cent when it released quarterly output data.

Analysts largely supported the bid since Xstrata has a track record of improving performance of companies it has bought, such as Canada’s Falconbridge and Australia’s MIM.

“We find it difficult to see any other bidders coming out of the woodwork for Lonmin, so unless shareholders reject the deal, we believe it is likely to go ahead,” said Investec analyst Rebecca O’Dwyer.

She said the bid was at a price earnings ratio of 14, below Lonmin’s average multiple of 17 over the year to June before the latest slide in mining shares.

Xstrata’s most important commodities are copper, coal and nickel, but the firm entered platinum last year with a $US1 billion purchase of South Africa’s Eland Platinum.

Xstrata has grown from a small Swiss producer of steel alloys in the late 1990s to the fifth-biggest mining group by market value through a string of acquisitions.

Lonmin has been turning robust profits, posting a 63 per cent jump in first-half profit in May on strong platinum prices.

Xstrata also posted a 2 per cent rise in first-half attributable net profit of $US2.83 billion, higher than an average forecast of analysts polled by the firm of $US2.65 billion.

Rio said in its second quarter and first half production report that second- quarter iron ore output rose 13% to a record because of rising demand from China.

The company also won a 85%-plus price hike for iron ore, which applies from the second quarter, so that should provide a substantial boost to first half earnings when they are reported next month.,

Rio said second quarter iron ore output rose to 41.9 million tonnes in the June quarter, from 37.1 million tons in the same quarter of 2007 (Rio uses a calendar financial year).

Second quarter iron ore output rose 12% from the March quarter and together 14% more iron ore was produced in the first half of 2008 at 79.23 million tonnes, compared to the 69.36 million tonnes in the first half of 2007.

Alumina and mined copper output also reached a record. But refined copper production in the first half of this year fell 20% to 161,000 tonnes for Rio, compared to 202,000 tonnes in the same period of last year.

Coking and thermal coal output in Queensland rose in the June quarter as Rio’s Queensland operations recovered from heavy rain and floods, while there was some improvement elsewhere in thermal coal sales. 

Sales from Coal and Allied in NSW were steady in the latest half year compared to 2007 as port congestion problems continued.

Rio shares rose 48 cents to $122.48 after the result was posted, turning round an earlier decline before the announcement. The shares then faded to close lower at $121.44, off 56 cents as investors look another look at the figures and concluded that there was a growing chance the offer from BHP might not succeed.

BHP shares fell 7 cents to $39.29 and the BHP offer of 3.4 of its shares for every Rio share was worth around $133.51. That’s a premium of around 10%: the market still reckons the offer has got little chance of succeeding.

Coking coal output rose 25% to two million tonnes in the quarter, while alumina output rose more than threefold and production of aluminum gained almost fivefold after Rio’s purchase last year of Alcan of Canada.

Mined copper was mixed, with a 27% drop at Bingham Canyon in the United States, a 22% increase at the Escondida mine in Chile (where BHP is a major shareholder )and a 27% rise at the Grasberg joint venture in the Indonesian province of Papua (with Freeport McMorran being the dominant shareholder).

Diamond output from the Argyle mine in WA dropped by 32% to 2.992 million carats after production was affected by a variability in feed grades as the mine transitions from open-pit operations to underground.

Uranium production was mixed, with a 26% drop at the Ranger mine in the Northern Territory and a 55% increase at the Rossing mine in Namibia.

Rio’s subsidiary, ERA reported the fall Tuesday and blamed excess water in the open pit that restricted access to the higher-grade ore.

Higher grades at Rossing led to an increase in production.

Commenting on the second quarter’s production results, chief executive Tom Albanese said in a statement accompanying the production reports

“These strong results show that we are continuing to expand to meet rapid demand growth in the developing world. We have set quarterly production records for iron ore, mined copper and alumina, thanks to increasing investment in growth projects and a management commitment to deliver more tonnes faster, while maintaining our focus on safety and costs.

“The integration of Alcan is proceeding to plan and the business continues to perform well. I am particularly pleased to see how swiftly our Australian coal operations recovered from the first quarter floods.

“Chinese GDP is continuing to grow at around ten per cent per annum, demand is strong while supply remains constrained. Fundamentals, not financial speculation, are driving the record prices we are realising across aluminium, copper, iron ore and coal and we see the same trends continuing into the future.”

• Record quarterly global production of iron ore, up 13 per cent on the second quarter of 2007, recovering some of the shortfall from the cyclones in the first quarter.
• Record quarterly iron ore production of 48 million tonnes in Australia, up 14 per cent (on a 100 per cent basis) compared with the second quarter of 2007, as the iron ore operations continue to expand their capacity.
• Weighted average iron ore price increase of 85.7 per cent negotiated with Asian customers for 2008 contract shipments from the Pilbara.
• Record quarterly mined copper production (for existing operations), up 15 per cent on the corresponding quarter of 2007.
• Rio Tinto Alcan continues to perform well with bauxite production up 100 per cent, alumina up by 231 per cent and aluminium up by 374 per cent, compared with the second quarter of 2007, reflecting the acquisition of Alcan in the fourth quarter of 2007. On a proforma basis the respective increases for bauxite, alumina and aluminium were 11 per cent, nine per cent and one per cent.
• The Sohar aluminium smelter in Oman began operating in June, on time and on budget, with first hot metal produced during the same month.
• Australian thermal and coking coal production were up by 15 per cent and 25 per cent on the second quarter of 2007, recovering well from the heavy rainfall experienced in the first quarter. Strong performance from the minerals businesses with borates production up 18 per cent and titanium dioxide feedstocks ten per cent higher than the second quarter of 2007.
• Agreement signed to sell the Kintyre uranium property in Western Australia for $495 million, as part of the Group’s overall $15 billion divestment target.