REG - Thungela Resources - Annual Results

Thungela ResourcesAnnouncement

17/03/2025 07:15

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250317:nRSQ8313Aa&default-theme=true

RNS Number : 8313A  Thungela Resources Limited  17 March 2025

THUNGELA RESOURCES LIMITED

(Incorporated in the Republic of South Africa)

Registration number: 2021/303811/06

JSE Share Code: TGA

LSE Share Code: TGA

ISIN: ZAE000296554

Tax number: 9111917259

('Thungela' or the 'Company' and, together with its affiliates, the 'Group')

 

2024 Annual results, final ordinary cash dividend declaration and announcement
of a share buyback

 

Thungela reports strong 2024 results reflecting operational excellence and
disciplined execution of strategic priorities

 

•     Operated a fatality-free business for 25 consecutive months

•     Export saleable production increased year-on-year in South Africa
and Australia, and exceeded full year guidance

•     Adjusted operating free cash flow* of R3.6 billion for the year
and net cash* of R8.7 billion at 31 December 2024, after capital expenditure
of R3.4 billion

•     Declaration of a final cash dividend of R11 per share, taking full
year dividend to R13 per share. Share buyback announced of up to R300 million

•     Elders construction completed and production ramp-up progressing
as planned. Zibulo North Shaft progressing on schedule and in line with budget

 

 Key performance metrics(1)                                                 31 December 2024  31 December 2023  % change

 (Rand million unless otherwise stated)
 Export saleable production - South Africa (kt)                             13,595            12,214                 11
 Export saleable production - Ensham Business (on a 100% basis) (kt)        4,068             1,012                    302
 Revenue                                                                    35,554            30,634                 16
 Profit for the reporting period                                            3,544             4,970                         (29)
 Earnings per share (cents/share)                                           2,676             3,766                         (29)
 Headline earnings per share                                                2,559             3,497                         (27)

 (cents/share)
 Dividend per share (cents/share)                                           1,300             2,000                         (35)
 Alternative performance measures*
 Adjusted EBITDA                                                            6,255             8,454                         (26)
 Adjusted EBITDA margin (%)                                                      18                28           (10pp)
 Adjusted operating free cash flow                                          3,589             6,806                         (47)
 Net cash                                                                   8,671             10,176                        (15)
 Capital expenditure                                                        (3,396)           (3,288)              3
 FOB cost per export tonne excluding royalties - South Africa (Rand/tonne)  1,130             1,084                4
 FOB cost per export tonne excluding royalties - Ensham Business            1,433             1,544                         (7)

 (Rand/tonne)

(1) The Group results in 2023, include the results of the Ensham Business for
four months from the acquisition date of 31 August 2023 to 31 December 2023.

 

 

MESSAGE FROM JULY NDLOVU, CHIEF EXECUTIVE OFFICER

Our 2024 results demonstrate continued operational excellence and underscore
the disciplined execution of our strategic priorities. Full-year export
saleable production exceeded guidance in both South Africa and Australia.
Notably, South African production grew for the first time in three years due
to increased productivity and improved rail performance. The higher production
and a focus on cost efficiencies resulted in a free-on-board (FOB) cost per
export tonne* below guidance. Our two key life extension projects, Elders and
Zibulo North Shaft, remain on schedule and on budget. Safety remains our first
value and we are unconditional about protecting the lives of our people. We
are proud to report that we have been operating a fatality-free business for
25 consecutive months.

 

Our increased focus on accountability and our safety culture is delivering
meaningful safety improvements. The Group total recordable case frequency rate
(TRCFR) was 1.93, compared to 2.80 in 2023. South Africa achieved a historic
low TRCFR of 1.07, compared to 1.40 in the prior year. In Australia, the TRCFR
improved significantly to 13.21, compared to 22.63 in the full year 2023,
reflecting a strong focus on improving conditions, leadership visibility and
critical controls.

 

Group revenue increased by 16% year-on-year to R35.6 billion, as Ensham was
included for the full 12 months in 2024, in comparison to the four months
following acquisition in the prior year (September to December 2023). The
Group generated adjusted EBITDA* of R6.3 billion and net profit of R3.5
billion, with the Ensham Business contributing R676 million to net profit in
2024. The margin contribution from our operation in Australia and the
marketing business in Dubai showcase the benefits of our geographic
diversification strategy. The Group ended the year with net cash* of R8.7
billion.

 

While the impact of a softer price environment across the Richards Bay and
Newcastle Benchmark coal prices continues to impact our financial results, it
is encouraging to note the improvement in the performance of Transnet Freight
Rail (TFR) post the annual maintenance shutdown period, which was completed in
July 2024. TFR achieved a run rate of 51.9Mtpa for 2024, an 8.4% increase in
performance from 2023 for the industry, with an average annualised run rate of
56.2Mt in the second half of the year, from an annualised run rate of 47.3Mt
in the first half of the year.

 

In South Africa, export saleable production of 13.6Mt ended above the guidance
range of 11.5Mt to 12.5Mt, and increased by 11% year-on-year, from 12.2Mt in
2023. The higher production output in 2024 was particularly notable given that
three underground mining sections were removed in 2023 in response to the rail
constraints. In line with the improved rail performance, our South African
operations ramped up production without adding additional capacity or material
cost to the business. FOB cost per export tonne excluding royalties* of R1,130
was below the low end of the guidance range of R1,170, mainly due to higher
production volumes.

 

In Australia, Ensham recorded strong export saleable production of 4.1Mt (on a
100% basis), an increase of 52% from the annualised run rate of 2.7Mt at the
date of acquisition. The improvement is mainly attributable to productivity
projects and the reconfiguration of the mine to include a fault development
crew dedicated to traversing geological faults, while the remaining sections
mine in productive areas. FOB cost per export tonne excluding royalties* of
R1,433 was below the low end of the guidance range of R1,590, mainly driven by
higher production and cost initiatives implemented during the year.

 

Global thermal coal market landscape

 

The softer thermal coal price environment continued throughout the year.
Milder winter conditions in the Northern Hemisphere led to subdued demand in
Europe, where coal and gas stock levels remained elevated, impacting the South
African coal market. The market for high calorific value product from
Australia was shaped by high stock levels brought upon by sluggish seaborne
demand in the main Asian coal markets, such as China, India, Japan and South
Korea.

 

We remain confident in the long-term fundamentals of the role of coal in the
energy mix in support of global energy demand. The International Energy Agency
confirmed in its 'World Energy Outlook 2024' report published in October 2024,
that the outlook for coal demand remains firm. There is strong energy demand
from emerging markets, with countries such as China and India continuing to
invest in new coal-fired power stations to meet the energy needs required to
sustain economic growth, as well as demand that is maintained due to delays in
projected closure dates for existing coal-fired power stations. Seaborne
traded thermal coal demand is expected to remain close to one billion tonnes
in 2025. It is important to note that the higher coal demand in these regions
more than offsets the decline in the use of coal in developed economies.

 

Ongoing geopolitical tensions and uncertainties continue to impact the energy
markets, leading to coal and gas supply volatility. Seaborne thermal coal
market supply may be impacted by in-country supply in key emerging markets,
such as China and India.

 

Progress on our strategic priorities

 

We have made significant progress in 2024 towards building a sustainable and
long-life business across our geographies. In South Africa, our two life
extension projects, Elders and Zibulo North Shaft, are key to improving our
life of mine and long-term competitiveness, and remain on schedule and within
budget. Total expansionary capital expenditure for these two projects since
commencement is R3.6 billion. The construction phase of the Elders project is
complete, and the ramp-up is progressing well, with the deployment of two
production sections to date. The mine is anticipated to produce at a run rate
of 4Mt of run of mine coal per annum, upon reaching steady state in early
2026. The Zibulo North Shaft project is ongoing with completion expected in
2026, which will extend the current underground operation's life to 2038.
The mine is expected to produce at a run rate of up to 8Mt of run of mine
coal per annum on completion of the project.

 

The Lephalale Coal Bed Methane (LCBM) project, situated in the Waterberg coal
field in Limpopo in South Africa, is a significant methane gas resource that
we are evaluating for development opportunities. A capital investment of
approximately R400 million will be made in 2025 for the acquisition of a
modular liquefied natural gas plant and associated site infrastructure, which
will demonstrate the value in use of the gas.

 

The Rietvlei coal mine was established to develop a domestic-focused coal
project with a direct benefit to local communities through an equity
shareholding. The intention of Thungela, with an effective 34% shareholding,
was to ensure the sustainability of the operation while our black economic
empowerment partners developed the project, and at the appropriate time to
exit our position. With the mine now fully operational and a domestic contract
in place, Thungela resolved to sell its interest to the existing partners for
a total cash consideration of R186 million. The transaction demonstrates
economic inclusion and our partners, together with the local communities,
participate in the full economic benefits of the operation.

 

In December 2024, we announced our intention to acquire a further 15% interest
in the Ensham Mine for a total consideration of AUD48 million. We are pleased
to advise that the relevant conditions precedent have been met, and the
transaction was completed on 28 February 2025. On 14 March 2025, we also
announced that we had entered into an agreement with Audley Capital and
Mayfair to acquire their 27.5% interest in Sungela Holdings, for an upfront
cash consideration of USD1.7 million, as well as contingent deferred
consideration of up to USD15.5 million payable over a period of up to six
years. Upon completion of this transaction, the Group will own 100% of the
Ensham Business. These transactions enable us to further execute our
geographic diversification strategy in Australia, enhancing the Group's
production profile and earnings, as well as maximising value through Thungela
Marketing International.

 

The resource development plan at Ensham, which was initiated post acquisition,
is progressing well. This will assist us to identify the full potential of the
asset and the related capital required to extract value from brownfield
opportunities.

 

Shareholder returns and capital allocation

 

In 2024, we completed two share buybacks for a total consideration of R601
million, or 3.2% of issued share capital. The share buybacks acknowledge the
diverse preferences of our shareholder base and reflect our confidence in the
Group's attractive long-term outlook and robust financial position.

 

The Group generated cash flows from operating activities of R5.3 billion for
the year. After investing R1.7 billion in sustaining capital expenditure*,
this resulted in an adjusted operating free cash flow* of R3.6 billion for the
year. We remain committed to building a long-life competitive business with an
expansionary capital spend of R1.7 billion during 2024.

 

Driving our ESG aspirations informs our approach to our existing business, how
we plan future projects and how we evaluate potential acquisitions. In
Australia, we contributed R970 million into an investment vehicle, similar to
the green fund in South Africa, to secure the necessary financial surety for
the Ensham rehabilitation liabilities, while we pursue acceptance into the
Queensland Financial Provisioning Scheme. In South Africa, we contributed a
further R204 million into the green fund in 2024. Including these investment
contributions, as well as the ongoing spend on rehabilitation activities, the
Group environmental liability coverage* has increased to 54%, compared to 40%
in 2023.

 

 

At 31 December 2024, the Group's net cash* position was R8.7 billion. We
continue to reserve R900 million to fund our life extension projects to
completion and R400 million for the LCBM project. Given the current weak
market conditions, the board considers it appropriate to maintain a cash
buffer of R5.4 billion. The Group holds undrawn credit facilities of R3.2
billion.

 

The board reaffirms its commitment to the dividend policy, which is to
distribute a minimum of 30% of adjusted operating free cash flow* to
shareholders. A final dividend of R11 per share has been declared, taking
total dividend to R13 per share. The board has also approved a share buyback
of up to R300 million. Total returned to shareholders, including share
buybacks of R460 million, is 64% of adjusted operating free cash flow* for
2024.

 

Since listing the business in 2021, the Sisonke Employee Empowerment Scheme
and the Nkulo Community Partnership Trust have together received R1.7 billion,
including R204 million relating to 2024, demonstrating Thungela's ability to
deliver strong returns to all of our stakeholders.

 

Looking ahead

 

In line with our purpose - to responsibly create value together for a shared
future - we are confident that our disciplined capital allocation approach
will ensure that Thungela delivers value for our people, communities and
stakeholders over the long term.

 

In particular, our focus remains on operating a fatality-free business and
delivering operational excellence by controlling the controllables. As we
position the business to take advantage of the long-term fundamentals
supporting coal demand globally, we remain committed to productivity
improvements and to enhancing the cost competitiveness of our operations,
driven by the Elders and Zibulo North Shaft projects. We are confident that
executing our strategic priorities will create meaningful shareholder value.

 

 

OPERATIONAL GUIDANCE - 2025

 

                                                                South Africa   Ensham
 Export saleable production (Mt) (Ensham on a 100% basis)       12.8 - 13.6    3.7 - 4.1
 FOB cost per export tonne* (Rand/tonne)                        1,220 - 1,300  1,650 - 1,780
 FOB cost per export tonne excluding royalties* (Rand/tonne)    1,210 - 1,290  1,470 - 1,580
 Capital - sustaining* (Rand million) (Ensham on a 100% basis)  1,400 - 1,700  700 - 950
 Capital - expansionary (Rand million)                          1,100 - 1,200  nil

Royalties are calculated using an assumed Richards Bay Benchmark coal price of
USD102.00 per tonne and an assumed Newcastle Benchmark coal price of
USD125.00 per tonne.

 

South African operations

 

Export saleable production guidance for 2025 of 12.8Mt to 13.6Mt is informed
by improved productivity and performance of TFR. The range is based on
expected rail performance of between 54Mtpa, at the lower end of the guidance,
and 58Mtpa at the upper end. The midpoint of the guidance is aligned with the
improved annualised run rate observed in the second half of 2024.

Our production footprint is entering a period of transition as the Goedehoop
mine and Zibulo opencast operations reach end of life in 2025. The Elders and
Zibulo North Shaft projects will continue to ramp up to full production during
2026.

FOB cost per export tonne excluding royalties* is expected to be between
R1,210 and R1,290. Including royalties, the range is between R1,220 and R1,300
per tonne, based on an assumed Richards Bay Benchmark coal price of
USD102 per tonne.

Sustaining capital expenditure* is expected to range between R1,400 million
and R1,700 million. Expansionary capital expenditure is expected to be between
R1,100 million and R1,200 million, which includes ongoing spend primarily on
the Zibulo North Shaft project, and R400 million related to the LCBM
project.

Ensham

 

Export saleable production guidance for 2025 is between 3.7Mt and 4.1Mt (on a
100% basis). The guidance is consistent with 2024 production as it allows for
the mine to traverse known geological faults during the year. We have made
good progress on improving productivity and will seek further opportunities as
our South African and Australian operations continue to share best
practices.

 

FOB cost per export tonne excluding royalties* is expected to be between
R1,470 and R1,580. Including royalties, the range is between R1,650 and R1,780
per tonne, based on an assumed Newcastle Benchmark coal price of USD125 per
tonne. We have already started to review opportunities for further
productivity improvement and cost savings at Ensham.

 

Sustaining capital expenditure* is expected to be between R700 million and
R950 million (on a 100% basis). This includes once-off capital expenditure of
approximately  R250 million, predominantly on land in order to secure
outstanding mining licences.

 

 

 

 

 

DIVIDEND DECLARATION AND SHARE REPURCHASE

 

The board has declared a final ordinary cash dividend of R11.00 per share,
payable to shareholders on the Johannesburg Stock Exchange and London Stock
Exchange in April 2025 and May 2025, respectively.

 

In addition, the board has authorised a share repurchase of up to R300
million, subject to market conditions. This will be executed in the period
commencing 18 March 2025 and, unless revised or terminated earlier, ending 4
June 2025, being the last trading day prior to the Group's next annual general
meeting, scheduled on Thursday, 5 June 2025, and will be subject to the
applicable legal and regulatory requirements.

 

Further details regarding the dividend payable to shareholders of Thungela as
well as the share repurchase can be found in a separate announcement dated
17 March 2025 on the Johannesburg Stock Exchange News Services (SENS) and the
London Regulatory News Services (RNS).

 

 

FORWARD-LOOKING STATEMENTS

This document includes forward-looking statements. All statements included in
this document (other than statements of historical facts) are, or may be
deemed to be, forward-looking statements, including, without limitation, those
regarding Thungela's financial position, business, acquisition and divestment
strategy, dividend policy, plans and objectives of management for future
operations (including development plans and objectives relating to Thungela's
products, production forecasts and resource and reserve positions). By their
nature, such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Thungela, or industry results, to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Thungela therefore cautions that
forward-looking statements are not guarantees of future performance.

 

Any forward-looking statement made in this document or elsewhere is applicable
only at the date on which such forward-looking statement is made. New factors
that could cause Thungela's business not to develop as expected may emerge
from time to time and it is not possible to predict all of them. Further, the
extent to which any factor or combination of factors may cause actual results
to differ materially from those contained in any forward-looking statement are
not known. Thungela has no duty to, and does not intend to, update or revise
the forward-looking statements contained in this document after the date of
this document, except as may be required by law. Any forward-looking
statements included in this document have not been reviewed or reported on by
the Group's independent external auditor.

 

Investors are cautioned not to rely on these forward-looking statements and
are encouraged to read the Annual Financial Statements for the year ended 31
December 2024 (Annual Financial Statements 2024), which are available from the
Thungela website via the following web link:
https://www.thungela.com/investors/financial-results.

 

ALTERNATIVE PERFORMANCE MEASURES

 

Throughout this Results Announcement a range of financial and non-financial
measures are used to assess our performance, including a number of financial
measures that are not defined or specified under International Financial
Reporting Standards (IFRS Accounting Standards), which are termed 'alternative
performance measures' (APMs). Management uses these measures to monitor the
Group's financial performance alongside IFRS Accounting Standards measures, to
improve the comparability of information between reporting periods. These APMs
should be considered in addition to, and not as a substitute for, or as
superior to, measures of financial performance, financial position or cash
flows reported in accordance with IFRS Accounting Standards. APMs are not
uniformly defined by all companies, including those in the Group's industry.
Accordingly, these measures may not be comparable with similarly titled
measures and disclosures by other companies. In this results announcement,
APMs are denoted with an asterisk (*).

 

 

RESULTS ANNOUNCEMENT

 

This Results Announcement, including the forward-looking statements, is the
responsibility of the directors of Thungela.

 

Shareholders are advised that this Results Announcement is only a select
extract of the information contained in the Annual Financial Statements 2024
and does not contain full or complete details. Any investment decisions by
investors and/or shareholders should be based on a consideration of the full
Annual Financial Statements as a whole and investors and/or shareholders are
encouraged to review the Annual Financial Statements 2024, which are available
on the Thungela website via the following web link:
https://www.thungela.com/investors/financial-results, and available on the
JSE's cloudlink, at

https://senspdf.jse.co.za/documents/2025/JSE/ISSE/TGAE/TGAFY2024.pdf
(https://senspdf.jse.co.za/documents/2025/JSE/ISSE/TGAE/TGAFY2024.pdf)

 

A conference call and webcast relating to the details of this Results
Announcement will be held at 12:00 SAST (10:00 GMT) on Monday, 17 March 2025.
Details to register for the conference call and webcast are available below:

 

Conference call:
https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=4371045&linkSecurityString=120f2faaf5
(https://services.choruscall.za.com/DiamondPassRegistration/register?confirmationNumber=4371045&linkSecurityString=120f2faaf5)

 

Webcast: https://78449.themediaframe.com/links/thungela250317_1200.html
(https://url.za.m.mimecastprotect.com/s/wiZECO7oyKuNBzG6svhDSGycVm?domain=78449.themediaframe.com)

 
(https://protect-za.mimecast.com/s/F6E7CGZ750i1gAxvH0-RlT?domain=us-west-2.protection.sophos.com)

The consolidated financial statements for the year ended 31 December 2024 were
audited by PricewaterhouseCoopers Inc. who have issued an unqualified audit
opinion. The full independent auditor's report and Annual Financial Statements
2024 are available for viewing on the Thungela website via the following web
link: https://www.thungela.com/investors/finacial-results.

 

This Results Announcement has not been audited or reviewed by the Group's
independent external auditor. Any reference to future financial performance
included in this announcement has not been separately reported on by the
Group's independent external auditor.

 

The Company's registered office is located at: 25 Bath Avenue, Rosebank,
Johannesburg, 2196, South Africa.

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the market abuse regulation
(EU) no. 596/2014 as amended by the market abuse (amendment) (UK mar)
regulations 2019. Upon the publication of this announcement via the regulatory
information service, this inside information is now considered to be in the
public domain.

 

 

 

 

On behalf of the board of directors

Sango Ntsaluba, Chairperson

July Ndlovu, Chief executive officer

 

Johannesburg (South Africa)

 

Date of SENS release: 17 March 2025

 

 

Investor relations

Hugo Nunes

Email: hugo.nunes@thungela.com

 

Shreshini Singh

Email: shreshini.singh@thungela.com

 

Media

Hulisani Rasivhaga

Email: hulisani.rasivhaga@thungela.com
(mailto:hulisani.rasivhaga@thungela.com)

 

UK Financial adviser and corporate broker

Panmure Liberum Limited

Tel: +44 20 3100 2000

 

Sponsor

Rand Merchant Bank

(A division of FirstRand Bank Limited)

Tel: +27 11 282 8000

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  FR PKABBBBKDFND