TerraCom : Quarterly Report - January to March 2022

TerraCom Limited

Blair Athol Mine Access Road Clermont, Queensland, 4721 +61 7 4983 2038

ABN 35 143 533 537

26 April 2022

QUARTERLY REPORT - JANUARY TO MARCH 2022

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 3 months ending 31 March 2022 (March Quarter).

Commenting on the result, Executive Chairman Craig Ransley, said:

"The combined operating EBITDA1 result for the March Quarter of $123 million from the Australian and South African operations is an all-time high for the Company. The result was supported by record export coal prices and solid operational performance across the Group."2

Q3 HIGHLIGHTS

• ✓ Record operating EBITDA1 of A$123 million for the March Quarter.

  • • Blair Athol achieved an operating EBITDA of A$84.7 million as export coal prices soared during the March Quarter resulting in an operating (EBITDA) cash margin of A$138 per sold tonne.

  • • The South African operations achieved an operating EBITDA of A$38.5 million2 resulting in an operating (EBITDA) cash margin of A$22.3 per sold tonne.

• ✓ Production and sales remain solid.

  • • Annualised year to date equity coal sales of 5.6 million tonnes per annum.

  • • BA is fully sold until end July 2022 and remains on track for coal sales in the 2022 financial year of approximately 2.3 million tonnes. A strong final quarter is expected from both an operational and financial perspective.

• ✓ Euroclear Bond forecast to be fully repaid in April 2022.

  • • The total principal owing on the Euroclear Bond as at the date of this report is US$53.5 million.

  • • US$86 million paid to bondholders during the March Quarter and up to the date of this report in interest (including special interest), fees and principal. The repayments include an initial US$20 million received as part of the US$60 million Prepayment Facility announced to the market on 28 February 2022.

  • • Upon receipt of the US$40 million from the Prepayment Facility, the Euroclear Bond will be fully repaid.

1 Non IFRS measure. Based on management accounts. The data presented represents 100% of the result from the South Africa Business Unit and therefore includes other equity holders, noting TerraCom's equity interest in the operating mines ranges from 48.9% to 49.0%. The data presented does not include the TerraCom corporate costs.

2 100% of the result from the South African Business Unit and therefore includes other equity holders, noting TerraCom's equity interest in the operating mines ranges from 48.9% to 49.0%.

Safety performance for the quarter improved, with the Total Recordable Injury Frequency Rate decreasing to 2.71, an improvement of 6% quarter on quarter (qoq), the Lost Time Injury Frequency Rate increased slightly from 1.1 to 1.2.

TerraCom continued to adjust its COVID-19 Management Plans as regulations changed and restrictions are lifted. Our goal is to manage potential outbreaks to keep our people safe and maintain our operations.

Q3 FINANCIAL AND OPERATIONAL HIGHLIGHTS

• • The operating EBITDA1 from the Australian and South African Business Units (including other equity holders) for the March Quarter and prior comparative period was as follows:

• • Operating EBITDA for Australia continued to show significant growth compared to the December 2021 quarter increasing by A$73.9 per tonne (more than 100%). The result is reflective of strong export coal prices continuing to be achieved and an ongoing focus on operational cost management.

• • The South African operations performed well during the March despite the excessive rainfall and supply chain issues which negatively impacted the results in the December 2021 quarter.

DEBT REDUCTION

• • Since 1 January 2022 the Company has repaid a total of US$86 million in interest (including special interest), fees and principal. The repayments include an initial US$20 million received as part of the US$60 million Prepayment Facility announced to the market on 28 February 2022.

• • The total principal owing on the Euroclear Bond as the date of this report is US$53.5 million.

• • The Company is forecasting to repay a further US$15 million to bondholders from operating cash flow in April 2022 and also working with its long-standing customer to finalise and receipt the remaining US$40 million under the Prepayment Facility.

• • Upon receipt of the US$40 million from the Prepayment Facility, the Euroclear Bond facility will be fully repaid.

Year to date managed3 coal sales represent annualised tonnes of 9 million tonnes per annum and year to date equity4 coal sales represent annualised tonnes of 5.6 million tonnes per annum.

MANAGED TONNES3

EQUITY TONNES4

PRODUCTION AND SALES

MANAGED TONNES3 (CONTINUING OPERATIONS)

MARCH 2022 QUARTER

DECEMBER 2021 QUARTER

EQUITY TONNES4 (CONTINUING OPERATIONS)

MARCH 2022 QUARTER

DECEMBER 2021 QUARTER

3 The data represents total tonnes and assumes 100% ownership of the South African operations, noting TerraCom's interest in the operating mines ranges from 48.9% to 49.0%.

4 The data represents equity tonnes, being the attributable tonnes to TerraCom's equity ownership.

AUSTRALIA BUSINESS UNIT

Blair Athol (BA) - 100% EQUITY INTEREST

Coal sales for the March Quarter totalled 612,000 tonnes with a reported revenue of A$223 per tonne.

Blair Athol remains on track for coal sales in the 2022 Financial Year of approximately 2.3 million tonnes.

Australian Financial Performance - Year to Date

The exceptional seaborne coal pricing resulted in BA delivering a strong operating EBITDA result of $180 million for the 9 months to 31 March 2022 with the March Quarter result contributing 47% of the year-to-date result.

Management has been focused on maintaining costs to an acceptable level, but costs have been impacted by revenue linked costs, including government royalties. The royalty per tonne in the 9 months ending 31 March 2022 was A$18.4 per tonne, which represents an increase of A$14.2 per tonne compared to FY2021.

5 Non IFRS measure. Based on management accounts. The data presented does not include the results from the South African Business unit or TerraCom corporate costs.

Total managed coal sales from the South African business unit increased by 264kt or 18% compared to the December 2021 quarter. The result was pleasing and more in line with year to date run rate levels.

New Clydesdale Colliery (NCC) - 49% EQUITY INTEREST

NCC performed well throughout the March Quarter. Operational plant yield continued to be a focus for the site, resulting in an overall yield of 68.2% for the March Quarter, driven by the greater proportion of export sales compared to the prior corresponding period.

The colliery achieved total coal sales during the March Quarter of 583kt, comprised of 354kt domestic sales and 229kt export sales. Total coal sales were consistent with the December 2021 quarter.

North Block Complex (NBC) - 49% EQUITY INTEREST

NBC had a strong March Quarter, delivering improved coal sales and ROM coal production compared to the December 2021 quarter (up 14% and 2% respectively).

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