With thermal coal prices at more than $US400 a tonne, Morgan’s issued a bullish update on the Brisbane-based New Hope, a company which has faced years of litigation over its Acland project, near Oakey as well as a shift in sentiment on coal.

But the Russian invasion of Ukraine changed the market dynamics and prices have soared to record levels which has forced even coking coal companies to shift their product into the energy markets.

“We think New Hope can re-rate as the market awakens to the sheer scope of current cash flows and ongoing dividend upside potential,” senior analyst Tom Sartor wrote in a note to investors.

He said fourth quarter sales of 1.85 million tonnes was above forecasts as was the company’s EBITDA.

Sartor tipped the company would generate a first quarter EBITDA of $875 million.

“Assuming modest capital expenditure, we think New Hope’s current net cash accumulation (pre-dividend) sits at around $180 million,” Sartor said.

“We also think New Hope’s controlling shareholder (Washington H Soul) is strongly motivated to draw higher dividends from New Hope for the significant optionality of re-investing that capital into non-coal assets/sectors where values have corrected.

“New Hope offers +11 per cent upside to our base case net present value but with clear leverage to higher coal prices and with significant dividend upside versus our forecasts.

“We estimate New Hope held about $627 million in net cash at July 31. If it targeted around $300 million of net cash post the full year 2022 dividend payment in early November, then it could plausibly pay a full-year final dividend of more than $850 million, equivalent to over $1 a share.

“The actual (dividend) will, of course, depend on several factors but clearly there is significant upside risk to consensus dividend expectations of 47 cents to 60 cents a share.”

New Hope is also awaiting a mining lease and water licence from the State Government for its Acland expansion. It has already received environmental approval.