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Mid-tier mining revenue up 15%

Who will be the next big independent Aussie miner to emerge? Conditions are right as the the mining sector is back on solid footing after the recent downturn with a good potential for growth, reports PriceWaterhouseCoopers in their latest ‘Aussie Mine 2017’ report released this week.


The data analysed is from the 50 largest mining companies on the ASX with market capitalisation of less than $5 billion at the last financial year end (MT50).

Revenue from the MT50 is revenue is up 15% with operating costs remaining flat.


With regards to impairments, they are the lowest level since 2011 and the highest EBITDA margins have been recorded in over 10 years. 


Capital expenditure is up 35%, 41% increase in dividend repayments, operating cash flows up 33% to almost $1 billion, debt repayment up 64%, and the first collective profit is being seen in 5 years.


Leading the charge of the MT50 companies is Evolution Mining Limited at number one, with the prime commodity being gold and a 19% jump in market capitalisation from 2016/2017.


The top ten MT50 companies account for 60% of the overall marketing capitalisation (a 5% increase since 2016).  Shareholders of these companies are seeing great results with a market capitalisation growth average of 27%. Eight of the companies in the top ten have held their place year on year, signally stability in the best performers.


With regards to commodity types in the top ten; gold, iron ore and coal are main drivers. Gains have come from the rebound in iron ore and coal prices, and the ongoing strength of gold prices. 73% of worldwide gold revenue is generated from the Oceania region, and 20 out of the 50 companies have gold as their main commodity. Coal revenue growth was 31% from financial year 2016-2017, and iron ore up 15% in the same period.


Only two commodities saw revenue decreases for the year with mineral sands down due to lower prices year-on-year and less production. Uranium prices still havn’t recovered from the Fukushima disaster.


Some key transaction throughout the year have included:

  • Yancoal’s $2.6 billion acquisition of Coal & Alllied from Rio Tinto plus undertaking the sale of a 17% interest in Hunter Valley Operations and a proposal for acquisition of Mitsubishi’s 29% interest in Warkworth JV
  • After a demerger with Metals X, Westgold Resources debuted at number 22 on the MT50 list
  • Iluka Recourses acquired Sierra Rutile Limited in Sierra Leone for $393 million
  • Evolution Mining gained an interest in the Ernest Henry mine in Queensland for $880 million consideration


PWC indicates these ‘ripe’ conditions signal the platform is there for the next big Australian miner to step up. 

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