TerraCom Limited (ASX:TER), a leading global coal mining company, has released its quarterly activities report for the three months ended 30 June 2023, showcasing robust production and financial performance despite facing market headwinds.
Production Highlights
During the June Quarter, TerraCom achieved notable production milestones:
- Total coal sales reached 1.8 million tonnes, with 1.1 million tonnes attributed to Total Equity coal sales.
- The Blair Athol (BA) operation showcased a remarkable recovery from the significant regional rain events experienced in the previous quarter, delivering total coal sales of 466,000 tonnes. This marked a substantial 23% improvement quarter on quarter.
- For the 12 months ending 30 June 2023 (FY2023), BA recorded total coal sales of 1.8 million tonnes, aligning with the company's guidance.
- TerraCom achieved a total coal sales figure of 8 million tonnes and equity coal sales of 4.8 million tonnes for FY2023.
- In the first 20 days of July 2023, BA continued its impressive performance with coal sales amounting to 154,000 tonnes.
Financial Highlights
The company also reported commendable financial results for the June Quarter and FY2023:
- BA achieved an average coal price of $198 per sold tonne during the June Quarter and $361 per tonne for FY2023.
- Operating EBITDA for the June Quarter amounted to $55 million.
- BA's operating EBITDA reached $44 million, resulting in an operating cash margin of $94.1 per sold tonne.
- The South African operations achieved an operating EBITDA of $11 million, with an operating cash margin of $8.4 per sold tonne.
- Overall, TerraCom achieved an impressive operating EBITDA of $473 million for FY2023, of which $408 million was attributable to the company.
- As of 30 June 2023, the company's cash at bank stood at $51 million (excluding Restricted Cash of $67 million).
- In June 2023, TerraCom distributed a dividend payment of 3 cents per share fully franked for the period ended 31 March 2023, amounting to a total payment of $24 million.
- The company's dividend return for the 9-month period ended 31 March 2023, including dividends paid for the quarters ended 30 September 2022 and 31 December 2022, reached 20.5 cents fully franked, representing approximately 73% of NPAT.
Operational Overview and Future Outlook
Danny McCarthy, the Managing Director of TerraCom Limited, provided insights into the company's performance and future prospects:
"Relative to the March Quarter, production in the June Quarter was stronger, demonstrating the operational recovery following significant regional rainfall impacting the business. Despite the continued softening of thermal coal prices, the combined operating EBITDA result for both the Australian and South African operations was $55 million.
The Blair Athol operation performed well following the multiple rain events during the previous quarter and the ongoing delays within the logistics network in Queensland negatively impacted scheduling. As a result, coal sales achieved were 466,000 tonnes, and while the result was a 23% improvement from the March Quarter, it was less than originally planned.
Our South African operations encountered a number of challenges during the June Quarter, resulting in lower delivered domestic and export sales than planned. The additional mining area at New Clydesdale Colliery (NCC) is coming along well, and we look forward to improved production, and resultant sales, from NCC over the coming months.
Following the recent dividend payment to shareholders of $24 million in June 2023, the Company has returned $244 million to shareholders in FY2023. In line with the Company's dividend policy, the next dividend is expected to be declared in August 2023 and paid in September 2023."
Despite facing market challenges and global economic uncertainties, TerraCom Limited has demonstrated resilience and efficiency in its operations. The company's commitment to delivering value to its shareholders through dividend payments further reinforces its position as a stable and reliable player in the coal mining industry. With a positive outlook for the coming months, TerraCom remains poised for continued success in the ever-evolving energy landscape.
