Macarthur Coal Ltd. (MCC.AU) said Tuesday it has upgraded its profit guidance for the fiscal year ended June 30 after better-than-forecast coal sales.

The Brisbane-based miner said it expects net profit of A$115 million-A$125 million, prior to any non-cash adjustments, up from previous guidance of A$103 million-A$113 million. The upgrade was driven by coal sales of 5.26 million metric tons, above guidance of 4.8 million-5 million tons.

"Our operations have remained focused on coal delivery and, with the Dalrymple Bay Coal Terminal achieving record throughput in June, we were able to load some shipments sooner than expected," Chief Executive Nicole Hollows said in a statement.

"Given additional sales in this financial year we have started the 2011 financial year with lower available coal stocks, however both of our mines are performing well and we are focused on continuing to perform well in 2011."

At 0235 GMT, Macarthur shares were up 2% at A$13.00, but the gains may be as much to do with renewed dealmaking in the coal sector as the profit upgrade.

With the Australian government last week abandoning its planned Resource Super Profits Tax and replacing it with the watered down Minerals Resource Rent Tax, some market watchers are tipping an increase in merger and acquisition activity as the uncertainty over the original tax proposal is removed.

This view was reinforced Monday when Thailand's Banpu PCL (BANPU.TH) launched a bid valuing Centennial Coal Ltd. (CEY.AU) at A$2.5 billion on the first working day after the MRRT was announced.

With expectations of further dealmaking in the coal sector running hot, IG Markets strategist Ben Potter said the market would now be watching closely to see if Peabody Energy Corp. (BTU) would rework its failed bid for Macarthur.

"The big question will be whether or not this upgrade and yesterday's M&A news reignites interest from potential suitors, in particular Peabody," he said in a client note.

"If Peabody thought Macarthur was worth A$15 per share under the now defunct RSPT, one would think it offers more value under the new MRRT."

Macarthur Coal rejected Peabody's A$3.8 billion offer in May after the U.S. group trimmed its offer to A$15 a share from A$16 after due diligence and factoring in the potential impact of the RSPT.

The profit upgrade came as analysts toured Macarthur's Queensland mine sites and received an update on the Middlemount growth project, a joint venture with Noble Group Ltd. (N21.SG).

-By Alex Wilson, Dow Jones Newswires: 613-9292-2094; alex.wilson@dowjones.com
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