TERRACOM LIMITED For personal use only
TerraCom Limited
Blair Athol Mine Access Road Clermont, Queensland, 4721 +61 7 4983 2038
ABN 35 143 533 537
31 January 2022
QUARTERLY REPORT - OCTOBER TO DECEMBER 2021
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 December 2021 (December Quarter).
Commenting on the result, Executive Chairman Craig Ransley, said:
"The Company has capitalised on strong market conditions and achieved an exceptional combined operating EBITDA1 result from the Australian and South African operations for the December Quarter of A$82.8 million. Debt reduction has been a key focus during the period with free cash flow being used to reduce the Euroclear bond and improve the Company's balance sheet. Looking forward, the export coal market continues to be supported by strong demand which should maintain pricing at attractive levels." 2
Q2 HIGHLIGHTS
- Record operating EBITDA1 of A$82.8 million for the December Quarter.
- Strong export coal prices resulted in an operating (EBITDA) cash margin of A$118 per sold tonne being achieved for Blair Athol in the December Quarter.
- The operating EBITDA result for the South African operations was A$23.5 million2 resulting in an operating (EBITDA) cash margin of A$16 per sold tonne, a 41% improvement compared to the September 2021 quarter.
- Production and sales remain solid.
- Annualised year to date equity coal sales of 5.43 million tonnes per annum.
- BA is fully sold until mid-May 2022 and remains on track for coal sales in the 2022 financial year of approximately 2.3 million tonnes.
- Company continues to deleverage its debt position.
- Bond long form documents executed reflecting an extended maturity date of the existing Euroclear Bond to 31 December 2022. There was no change to the commercial terms of the facility.
- The total principal owing on the Euroclear Bond as at 31 December 2021 was US$134.9 million. This represents a reduction of US$32.2 million, equivalent to 19% of the facility balance as at 30 June 2021.
- Non IFRS measure. Based on management accounts. The data presented represents 100% of the result from the South
Africa Business Unit and therefore includes other equity holders, noting TerraCom's equity interest in the operating mines ranges from 48.9% to 49.0%. The data presented does not include the TerraCom corporate costs. - 100% of the result from the South African Business Unit and therefore includes other equity holders, noting TerraCom's equity interest in the operating mines ranges from 48.9% to 49.0%.
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SAFETY AND COVID-19
Safety performance for the quarter improved, with the Total Recordable Injury Frequency Rate decreasing to 2.87, an improvement of 8% quarter on quarter (qoq), the Lost Time Injury Frequency Rate improved slightly to 1.08.
TerraCom amended its detailed COVID-19 Management Plans in compliance with the relevant regulations and protocols in the jurisdictions of its business to manage potential outbreaks to keep our people safe and maintain our operations.
Q2 FINANCIAL AND OPERATIONAL HIGHLIGHTS
- The operating EBITDA1 from the Australian and South African Business Units (including other equity holders) for the December Quarter was as follows:
December 2021 Quarter | September 2021 Quarter | |||
Operating | Operating | Operating | Operating | |
EBITDA (AUD | EBITDA (AUD$ / | EBITDA (AUD | EBITDA (AUD$ / | |
$million) | Sold Tonne) | $million) | Sold Tonne) | |
Australia | $59.3 | $118.1 | $36.0 | $64.5 |
South Africa | $23.5 | $16.1 | $21.8 | $11.4 |
- Operating EBITDA for Australia continued to show significant growth compared to the September 2021 quarter with total revenue increasing by A$53.6 per tonne or 83%.
- During the month of December, the South African operations were negatively affected by extreme rainfall and higher than seasonal averages which impacted both production and logistics. Despite these issues, the combined EBITDA margin for the December Quarter improved by 41% compared to the September 2021 quarter, predominately driven by strong export coal pricing.
DEBT REDUCTION
- The total redemption value of the Euroclear Bond as at 30 June 2021 was US$167.1 million. Over the last 6-month period, since 1 July 2021, the Company has repaid a total of US$44.1 million in interest (including special interest), fees and principal.
- The total principal owing on the Euroclear Bond as at 31 December 2021 was US$134.9 million. This represents a reduction of US$32.2 million, equivalent to 19% of the facility balance as at 30 June 2021.
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YEAR TO DATE OPERATIONAL RESULTS
only | Year to date managed3 coal sales represent annualised tonnes of 8.9 million tonnes | |||||||||||||||||||||||||||||
per annum and year to date equity4 coal sales represent annualised tonnes of | ||||||||||||||||||||||||||||||
5.4 million tonnes per annum. | ||||||||||||||||||||||||||||||
MANAGED TONNES3 | EQUITY TONNES4 | |||||||||||||||||||||||||||||
use | Export | Domestic | Total | Annualised | Export | Domestic | Total | Annualised | ||||||||||||||||||||||
(000's) | (000's) | (000's) | (Millions) | (000's) | (000's) | (000's) | (Millions) | |||||||||||||||||||||||
Australia | 1,067 | - | 1,067 | 2.13 | 1,067 | - | 1,067 | 2.13 | ||||||||||||||||||||||
South Africa | 667 | 2,700 | 3,367 | 6.73 | 326 | 1,322 | 1,648 | 3.30 | ||||||||||||||||||||||
Total | 1,734 | 2,700 | 4,434 | 8.86 | 1,393 | 1,322 | 2,715 | 5.43 | ||||||||||||||||||||||
personal | ||||||||||||||||||||||||||||||
PRODUCTION AND SALES | ||||||||||||||||||||||||||||||
MANAGED TONNES3 (CONTINUING OPERATIONS) | ||||||||||||||||||||||||||||||
DECEMBER 2021 QUARTER | SEPTEMBER 2021 QUARTER | |||||||||||||||||||||||||||||
Export | Domestic | Total | Export | Domestic | Total | |||||||||||||||||||||||||
(000's) | (000's) | (000's) | (000's) | (000's) | (000's) | |||||||||||||||||||||||||
Australia | 502 | - | 502 | 565 | - | 565 | ||||||||||||||||||||||||
South Africa | 429 | 1,030 | 1,459 | 238 | 1,670 | 1,908 | ||||||||||||||||||||||||
Total | 931 | 1,030 | 1,961 | 803 | 1,670 | 2,473 | ||||||||||||||||||||||||
For | EQUITY TONNES4 (CONTINUING OPERATIONS) | |||||||||||||||||||||||||||||
DECEMBER 2021 QUARTER | SEPTEMBER 2021 QUARTER | |||||||||||||||||||||||||||||
Export | Domestic | Total | Export | Domestic | Total | |||||||||||||||||||||||||
(000's) | (000's) | (000's) | (000's) | (000's) | (000's) | |||||||||||||||||||||||||
Australia | 502 | - | 502 | 565 | - | 565 | ||||||||||||||||||||||||
South Africa | 210 | 504 | 714 | 116 | 818 | 934 | ||||||||||||||||||||||||
Total | 712 | 504 | 1,216 | 681 | 818 | 1,499 | ||||||||||||||||||||||||
- 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%.
- The data represents equity tonnes, being the attributable tonnes to TerraCom's equity ownership.
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OPERATIONS
AUSTRALIA BUSINESS UNIT
Blair Athol (BA) - 100% EQUITY INTEREST
Thousands of tonnes (kt) | Dec 2021 | Dec 2020 | Change | Dec 2021 | Sept | Change |
% | 2021 | % | ||||
ROM Coal Production | 602 | 550 | 10% | 602 | 672 | (10%) |
Saleable Coal | 524 | 573 | (9%) | 524 | 528 | (1%) |
Coal Sales | 502 | 585 | (14%) | 502 | 565 | (11%) |
Inventory (ROM) | 12 | 35 | (65%) | 12 | 52 | (76%) |
Inventory (Saleable) | 92 | 121 | (24%) | 92 | 79 | 16% |
Coal sales for the December 2021 Quarter totalled 502,000 tonnes with a reported revenue of A$219 per tonne, a result 4% higher than the forecast revenue of A$210 per tonne for the period.
A third shipment was planned for the month of December 2021 but due to poor weather conditions experienced at the port throughout the Christmas to New Year period, berthing was delayed, and the shipment subsequently sailed on 5 January 2022. All coal for this shipment was at the port and ready to be loaded as at 31 December 2021.
If the third shipment departed as scheduled, the Company would have recorded total coal sales of 581,000 tonnes for the December Quarter, which would have represented an annualised coal sales run rate for the 6 months ended 31 December 2021 of 2.3 million tonnes per annum.
Blair Athol remains on track for coal sales in the 2022 Financial Year of approximately 2.3 million tonnes.
Australian Financial Performance - Year to Date
July to Dec 2021 | July to Dec 2021 | |
Financial Performance Summary5 | A$ per Sold | |
A$'million Total | ||
Tonne | ||
Revenue | 189.6 | 177.7 |
Costs | (94.3) | (88.4) |
Operating EBITDA | 95.3 | 89.3 |
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.
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The exceptional seaborne coal pricing has resulted in BA delivering a strong operating EBITDA result of $95.3 million for the 6 months to December 2021.
The costs per tonne have been impacted by revenue linked costs, including government royalties. The royalty per tonne in the 6 months ending 31 December 2021 was A$16.0 per tonne, which represents an increase of A$11.8 per tonne or 281% compared to FY2021.
SOUTH AFRICA BUSINESS UNIT
Total managed coal sales from the South African business unit decreased by 449kt or 23% compared to September 2021 quarter. One of the contributing factors was due to high seasonal rainfall during the month of December 2021 which impacted both production and logistics during the period. Notwithstanding this, contracted domestic offtake quantities have been delivered year to date to Eskom on a combined basis.
New Clydesdale Colliery (NCC) - 49% EQUITY INTEREST
Thousands of tonnes (kt) | Dec | Dec | Change % | Dec | Sept | Change % |
2021 | 2020 | 2021 | 2021 | |||
ROM Coal Production | 1,034 | 1,110 | (7%) | 1,034 | 1,122 | (8%) |
Saleable Coal | 628 | 643 | (2%) | 628 | 748 | (16%) |
Coal Sales | 575 | 633 | (9%) | 575 | 701 | (18%) |
Inventory (ROM) | 102 | 114 | (10%) | 102 | 70 | 46% |
Inventory (Saleable) | 71 | 56 | 26% | 71 | 66 | 7% |
NCC performed well throughout the December Quarter. Operational plant yield continued to be a focus for the site, resulting in an overall yield of 62.7% for the December Quarter, driven by the greater proportion of export sales compared to the prior corresponding period.
The colliery achieved total coal sales during the December Quarter of 575kt, comprised of 343kt domestic sales and 232kt export sales. Total coal sales and ROM coal production were lower than the September 2021 quarter (down 18% and 8% respectively) and this was predominately because of reduced domestic sales into Eskom during the month of December 2021 due to seasonal rainfall activity and slow truck movements into the Eskom power station.
The export volumes achieved at NCC were excellent throughout the December Quarter with the site improving its export deliveries by 30% compared to the September 2021 quarter. Strong export coal pricing meant that export sales revenue
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TerraCom Limited published this content on 30 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 January 2022 22:20:06 UTC.
