TERRACOM LIMITED TerraCom Limited
Blair Athol Mine Access Road Clermont, Queensland, 4721 +61 7 4983 2038
ABN 35 143 533 537
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25 July 2022
JUNE QUARTERLY REPORT - Q4 FY2022
TerraCom Limited (TerraCom or Company) (ASX: TER), an emerging resources company with a large portfolio of operating assets in Australia and South Africa, presents its quarterly activities report for the three (3) months ending 30 June 2022 (June Quarter).
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HIGHLIGHTS
- Record operating EBITDA1 of $224 million for the June Quarter.
- Blair Athol achieved an operating EBITDA2 of $174 million as export coal prices remained high during the June Quarter resulting in an operating cash margin of $278 per sold tonne.
- The South African operations achieved an operating EBITDA3 of $50 million resulting in an operating cash margin of $32 per sold tonne.
- Record average coal price of $403 per sold tonne achieved at Blair Athol for the June Quarter and $250 per sold tonne achieved for FY2022.
- FY2022 managed coal sales5 of 9.0Mt.
- Record full year operating EBITDA1 of $488 million, of which 45% was achieved in the June Quarter in line with forecast.
- Strong demand continues from the Japanese and South Korean energy markets and Indian sponge iron market.
- Full repayment of the Euroclear Bond and all remaining debt within TerraCom Limited and the Australian Business Unit occurred during the June Quarter.
- Closing cash at bank of $86 million4 as at 30 June 2022.
- The Company remains on track to declare a dividend for the period ending 30 June 2022, estimated to be paid during September 2022. As previously announced, the dividend is forecast to be an initial unfranked dividend of 10 cents per share.
Comments from Managing Director, Danny McCarthy
"TerraCom achieved an outstanding result for the June Quarter with a combined operating EBITDA1 result of $224 million from the Australian and South African operations.
The June Quarter combined operating EBITDA surpasses the previous quarter by 250% and sets a new all-time record for the Company underpinned by solid operational performance across the Group and the continuation of exceptional export coal prices and demand.
Following the repayment of the Euroclear Bond, the Company's balance sheet is in great shape and our forecast cash flows look very strong.
The Board looks forward to being able to recommence dividends to shareholders as previously
announced."
SAFETY
Group safety performance for the quarter improved, with the total recordable injury frequency rate (TRIFR) decreasing to 2.22, an improvement of 18% quarter on quarter (qoq). The lost time injury frequency rate (LTIFR) also decreased from 1.23 to 0.86, an improvement of 30% qoq. For the full year ending 30 June 2022, TRIFR and LTIFR improved 26% and 19% respectively.
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COVID-19
TerraCom continued with proactive COVID-19 Management Plans with little impact to its operations resulting. Our goal, as regulations and restrictions continue to evolve, is to keep our people safe whilst delivering on our operational requirements.
YEAR TO DATE OPERATIONAL RESULTS
Full year managed coal sales were 9.0 million tonnes and full year equity coal sales were 5.6 million tonnes. This result was consistent with forecast.
MANAGED TONNES5 | EQUITY TONNES6 | |||||
Export | Domestic | Total | Export | Domestic | Total | |
(000's) | (000's) | (000's) | (000's) | (000's) | (000's) | |
Australia | 2,303 | - | 2,303 | 2,303 | - | 2,303 |
South Africa | 1,507 | 5,150 | 6,657 | 739 | 2,524 | 3,263 |
Total | 3,810 | 5,150 | 8,960 | 3,042 | 2,524 | 5,566 |
PRODUCTION AND SALES RESULTS
MANAGED TONNES5 (CONTINUING OPERATIONS)
JUNE QUARTER | MARCH QUARTER | |||||
Export | Domestic | Total | Export | Domestic | Total | |
(000's) | (000's) | (000's) | (000's) | (000's) | (000's) | |
Australia | 624 | - | 624 | 612 | - | 612 |
South Africa | 383 | 1,184 | 1,567 | 457 | 1,266 | 1,723 |
Total | 1,007 | 1,184 | 2,191 | 1,069 | 1,266 | 2,335 |
EQUITY TONNES6 (CONTINUING OPERATIONS)
JUNE QUARTER | MARCH QUARTER | |||||
Export | Domestic | Total | Export | Domestic | Total | |
(000's) | (000's) | (000's) | (000's) | (000's) | (000's) | |
Australia | 624 | - | 624 | 612 | - | 612 |
South Africa | 188 | 581 | 769 | 224 | 620 | 844 |
Total | 812 | 581 | 1,393 | 836 | 620 | 1,456 |
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Q4 FINANCIAL AND OPERATIONAL HIGHLIGHTS
The operating EBITDA1 from the Australian and South African Business Units (including other equity holders) for the June Quarter and prior comparative period was as follows:
Operating EBITDA1 | Operating EBITDA1 | |||
(AUD $million) | (AUD$ / Sold Tonne) | |||
June 2022 Quarter | March 2022 Quarter | June 2022 Quarter | March 2022 Quarter | |
Australia | $173.6 | $84.7 | $278.2 | $138.4 |
South Africa | $50.1 | $38.5 | $32.0 | $22.3 |
Group | $223.7 | $123.2 | ||
Operating EBITDA2 for Australia continued to show significant growth compared to the March 2022 Quarter (March Quarter) increasing by $89 million (more than 100%). The result reflects the continued strong export coal prices being achieved, the consistent production performance and relentless focus on disciplined operational cost management during a time when cost pressures are pertinent in the industry.
The South African operations performed well during the June Quarter despite the well-known supply chain issues which are being well managed.
OPERATIONS
AUSTRALIA BUSINESS UNIT
Blair Athol (BA) - 100% EQUITY INTEREST
June | June | Change | June | March | Change | |||||||||||||||
Thousands of tonnes (kt) | 2022 | 2021 | 2022 | 2022 | ||||||||||||||||
% | % | |||||||||||||||||||
QTR | QTR | QTR | QTR | |||||||||||||||||
ROM Coal Production | 716 | 619 | 16% | 716 | 790 | (9%) | ||||||||||||||
Saleable Coal | 594 | 534 | 11% | 594 | 639 | (7%) | ||||||||||||||
Coal Sales | 624 | 510 | 22% | 624 | 612 | 2% | ||||||||||||||
Inventory (ROM) | 56 | 19 | 195% | 56 | 86 | (35%) | ||||||||||||||
Inventory (Saleable) | 31 | 123 | (75%) | 31 | 60 | (48%) | ||||||||||||||
Coal sales for the June Quarter totalled 624kt tonnes with a reported revenue of A$402.9 per tonne. Despite usually high unseasonal rainfall in the June Quarter, Blair Athol achieved forecast coal sales to deliver a run rate of approximately 2.5 million tonnes per annum.
Blair Athol achieved coal sales for the 2022 Financial Year of 2.3Mt, consistent with previous market guidance7.
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Australian Financial Performance
Financial Performance Summary8 | July 2021 to June 2022 | July 2021 to June 2022 | ||||||
A$'million Total | A$ per Sold Tonne | |||||||
Revenue | 576.4 | 250.5 | ||||||
Costs | (222.8) | (96.8) | ||||||
Operating EBITDA2 | 353.6 | 153.7 | ||||||
The exceptional seaborne coal pricing resulted in BA delivering a strong operating EBITDA2 result of $353.6 million for the 12 months to 30 June 2022 with the June Quarter result contributing 49% of the full financial year result.
Management remains steadfast on their focus on operational cost containment to an acceptable level at the mine site, despite FOB costs being impacted by revenue linked costs (including government royalties), diesel and current inflation pressures being experienced by the mining industry. The royalty per tonne in the 12 months ending 30 June 2022 was $26.4 per tonne, which on a full year basis represents an increase of approximately $22 per tonne compared to FY2021.
SOUTH AFRICA BUSINESS UNIT
Total ROM coal production achieved by the South African operations during the June Quarter was 22% higher than what was achieved in the March Quarter. Even though managed coal sales5 decreased by 156kt or 9% compared to the March 2022 quarter, the result was in line with year to date run rate levels.
On a full year basis, 96% of contracted domestic offtake quantities were delivered to Eskom on a combined basis.
June | June | Change | June | March | Change | |||||||||||||||
Thousands of tonnes (kt) | 2022 | 2021 | 2022 | 2022 | ||||||||||||||||
% | % | |||||||||||||||||||
QTR | QTR | QTR | QTR | |||||||||||||||||
ROM Coal Production | 2,653 | 2,655 | 0% | 2,653 | 2,179 | 22% | ||||||||||||||
Saleable Coal | 1,647 | 1,701 | (3%) | 1,647 | 1,482 | 11% | ||||||||||||||
Coal Sales | 1,568 | 1,962 | (20%) | 1,568 | 1,723 | (9%) | ||||||||||||||
Inventory (ROM) | 427 | 258 | 66% | 427 | 342 | 25% | ||||||||||||||
Inventory (Saleable) | 278 | 259 | 7% | 278 | 153 | 82% | ||||||||||||||
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New Clydesdale Colliery (NCC) - 49% EQUITY INTEREST
June | June | Change | June | March | Change | |||||||||||||||
Thousands of tonnes (kt) | 2022 | 2021 | 2022 | 2022 | ||||||||||||||||
% | % | |||||||||||||||||||
QTR | QTR | QTR | QTR | |||||||||||||||||
ROM Coal Production | 1,015 | 1,054 | (4%) | 1,015 | 915 | 11% | ||||||||||||||
Saleable Coal | 549 | 582 | (6%) | 549 | 606 | (9%) | ||||||||||||||
Coal Sales | 488 | 626 | (22%) | 488 | 583 | (16%) | ||||||||||||||
Inventory (ROM) | 139 | 122 | 14% | 139 | 104 | 33% | ||||||||||||||
Inventory (Saleable) | 131 | 66 | 99% | 131 | 82 | 59% | ||||||||||||||
NCC had a reasonable month, despite ongoing logistics constraints impacting export sales which were lower than anticipated and down approximately 25% from the prior period. Total coal sales during the June Quarter were 488kt, comprised of 318kt domestic sales and 170kt export sales.
North Block Complex (NBC) - 49% EQUITY INTEREST
June | June | Change | June | March | Change | |||||||||||||||
Thousands of tonnes (kt) | 2022 | 2021 | 2022 | 2022 | ||||||||||||||||
% | % | |||||||||||||||||||
QTR | QTR | QTR | QTR | |||||||||||||||||
ROM Coal Production | 1,166 | 1,140 | 2% | 1,166 | 995 | 17% | ||||||||||||||
Saleable Coal | 832 | 781 | 6% | 832 | 623 | 33% | ||||||||||||||
Coal Sales | 751 | 908 | (17%) | 751 | 786 | (5%) | ||||||||||||||
Inventory (ROM) | 148 | 5 | >100% | 148 | 113 | 31% | ||||||||||||||
Inventory (Saleable) | 116 | 168 | (31%) | 116 | 31 | >100% | ||||||||||||||
NBC had a relatively consistent June Quarter, delivering ROM coal production of 1,166kt, up 17% from the March Quarter.
Export coal sales continue to be strong from NBC despite the mine having to use alternate supply chain methods (trucking) due to ongoing constraints with the rail system in South Africa. Total export coal sales delivered in the June Quarter were 213kt and total sales to Eskom were 538kt.
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TerraCom Limited published this content on 24 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 July 2022 22:33:04 UTC.
