where is the hope?

Where there's Hope
NEW Hope Corporation shareholders will be hoping to get their hands on a special dividend after the coal business banks a $576 million cheque on the sale of its Arrow Energy stake this week.

The Arrow position was acquired for about $119 million, while post-tax proceeds received from the sale to the Shell/PetroChina consortium should top $439 million.

Even before the Arrow disposal, New Hope was sitting on a healthy cash balance of about $1.4 billion, so there's no pressing need to hang on to the cash windfall.

Indeed, analysts from Ord Minnett reckon the company's exploration and development projects can be funded from operating cash flow of about $300 million a year and rising.

The projects include expansion of the QBH export coal facility, a doubling in output from the New Acland mine, and development of a coal-to-liquids strategy.

According to Ord Minnett, 35 a share would be in the ballpark for a special dividend.

A likely cash windfall isn't the only good news for New Hope investors. Ord Minnett has reassessed New Hope's value in light of the Banpu bid for Centennial Coal, and the resulting valuation of about $7.75 a share compares favourably with the current share price of $4.75.

The broker valuation is based on Banpu's offer of about $6.80 for each reserve tonne.