REG - Thungela Resources - Interim Results

Thungela ResourcesAnnouncement

18/08/2025 07:00

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RNS Number : 6126V  Thungela Resources Limited  18 August 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')

 

Interim results for the six months ended 30 June 2025, ordinary cash dividend
declaration and a share repurchase

 

Thungela's strong balance sheet enables shareholder returns for the six months
ended 30 June 2025 while navigating challenging operating conditions

 

•     Operating a fatality-free business for two and a half years

•     Export saleable production in South Africa increased year-on-year to
6.4Mt and Ensham achieved production of 1.6Mt (on a 100% basis)

•     Adjusted operating free cash flow* of R484 million for the period
and net cash* of R6.3 billion at 30 June 2025, after capital expenditure of
R1.2 billion

•     Declaration of an ordinary interim cash dividend of R2 per share
and a share buyback of up to R140 million

•     Shareholder returns of 87% of adjusted operating free cash flow*
underscores our commitment to shareholder returns through the cycle

•     The Group remains on track to achieve full year guidance

 

 Key performance metrics(1)                                                 30 June 2025        30 June 2024     % change

 (Rand million unless otherwise stated)
 Export saleable production -        South Africa (kt)                      6,438               6,167               4
 Export saleable production - Ensham (on a 100% basis) (kt)                 1,574               1,884                        (16)
 Revenue                                                                    14,813              16,752                       (12)
 Profit for the reporting period                                            248                 1,186                        (79)
 Earnings per share (cents/share)                                           193                 952                          (80)
 Headline earnings per share                                                192                 952                          (80)

 (cents/share)
 Dividend per share (cents/share)                                           200                 200                   -
 Alternative performance measures*
 Adjusted EBITDA                                                            691                 2,146                        (68)
 Adjusted EBITDA margin (%)                                                    5                     13          (8pp)
 Adjusted operating free cash flow                                          484                 936                          (48)
 Net cash                                                                   6,250               6,683                        (6)
 Capital expenditure                                                        (1,214)             (1,541)                      (21)
 FOB cost per export tonne excluding royalties - South Africa (Rand/tonne)  1,258               1,189                        (6)
 FOB cost per export tonne excluding royalties - Ensham (Rand/tonne)        1,694               1,360                        (25)

( )

1 The Group financial results include the results of the Ensham Business at
85% until 28 February 2025, and 100% from that date.

( )

 

MESSAGE FROM JULY NDLOVU, CHIEF EXECUTIVE OFFICER

We are proud to report that we have operated for two and a half years without
a loss of life. This bears testament to our unwavering commitment to safety as
our first value. We remain unconditional about protecting the lives of our
people.

 

The global operating environment was characterised by increasing geopolitical
uncertainties and tariff escalations disrupting global supply chains. These
uncertainties resulted in weak demand in key coal demand regions resulting in
softer prices, last seen during the Covid-19 pandemic. The financial results
for the six months ended 30 June 2025 however, demonstrate the strength of
our balance sheet, which has enabled the business to navigate the challenging
market and operating environments while maintaining a disciplined capital
allocation approach. We maintained our focus on controlling the controllables
through increased production in South Africa, notwithstanding the impact of
abnormally high rainfall at some of our opencast operations. In addition, our
proactive approach in shielding the business from currency volatility has
contributed R1.4 billion to our earnings.

 

Our performance

 

Our financial results reflect the continued pressure on coal prices, with the
average realised export prices in South Africa and Australia declining by 11%
and 10% respectively. The softer coal prices, combined with a weaker US dollar
to South African rand exchange rate, have led to a decrease in Group revenue
in the first half of the year. Group revenue decreased by 12% year-on-year to
R14.8 billion, realising an adjusted EBITDA* of R691 million and net profit of
R248 million. The Group generated adjusted operating free cash flow* of R484
million for the first half of the year, which was positively impacted by a
working capital unwind of R690 million and cash inflows of R453 million
generated from our continued focus on managing foreign currency risk,
resulting in net cash* of R6.3 billion at 30 June 2025.

 

The Group recorded export saleable production of 8.0Mt (on a 100% basis) for
the first half of the year. In South Africa, export saleable production
increased by approximately 300kt to 6.4Mt, mainly due to productivity gains at
Zibulo and Mafube, while production at Khwezela was impacted by abnormally
high rainfall in the period. Free on board (FOB) cost per export tonne
excluding royalties* of R1,258 was in line with the guidance range. Our full
year guidance for export saleable production of 12.8Mt to 13.6Mt remains
appropriate as production is seasonally weighted towards the second half of
the year. Consequently, guidance for FOB cost per export tonne excluding
royalties* of R1,210 to R1,290 also remains appropriate.

 

The South African coal industry continues to benefit from the improved rail
performance. In the first half of the year, Transnet Freight Rail achieved an
annualised run rate of 54.3Mt, compared to 51.9Mt for 2024. The improved rail
performance stems from the ongoing industry collaborative initiatives as well
as further optimisation projects, such as the signalling project, which are
expected to improve rail performance going forward.

 

Ensham achieved export saleable production of 1.6Mt (on a 100% basis),
compared to 1.9Mt (on a 100% basis) in the first six months of 2024.
Production and export saleable product qualities were impacted by challenging
geology in the first half of the year.

FOB cost per export tonne excluding royalties* of R1,694 was above the upper
end of the guidance range, as the mine incurred costs to produce run of mine
tonnes which have not yet been reported as saleable production due to quality
variations. It is expected that these tonnes will be reported as saleable
production in the second half of the year.

 

We expect production at Ensham to improve in the second half of the year,
however, given the geological conditions experienced, production is likely to
be closer to the lower end of the guidance range of 3.7Mt to 4.1Mt.
Consequently, FOB cost per export tonne excluding royalties* will be at the
upper end of the full-year guidance range of R1,470 to R1,580.

 

The Group's strategic projects remain imperative to the business, with Elders
beginning to produce export saleable production as we continue to ramp up. The
Zibulo North Shaft project is making good progress and is scheduled to be
completed in 2026, within budget. These two life extension projects are key to
the long-term sustainability of the business in South Africa, as the Goedehoop
mine approaches its end of life in 2025. At Isibonelo, the coal supply
agreement is reaching its end of contract term and the mine will thus come to
the end of its life in 2025. We are evaluating opportunities to close these
operations in a sustainable and responsible manner. We continue to invest in
the Lephalale Coal Bed Methane project as we seek to demonstrate the value in
use of the gas.

 

Navigating thermal coal markets

 

Geopolitical tensions and rising tariffs are significantly disrupting global
supply chains and constraining economic growth. Consequently, energy security
has become central to national economic strategies, driving an increase in
domestic production in key demand countries such as China and India. The
impact of slowing growth on coal demand, coupled with increased domestic
production, has resulted in high stockpile levels at major import hubs,
leading to depressed prices.

 

Despite the lower demand for coal in the first half of 2025, coal production
is likely to remain at levels similar to 2024, driven mainly by higher
in-country production in China and India. On the other hand, production from
Indonesia has slowed down as a result of the lower coal prices and the impact
of adverse weather conditions. Production in Australia is also lower as a
result of mine accidents and adverse weather conditions in the first half of
the year. Columbia's main coal producers have recently announced a reduction
in annual thermal coal production due to the low coal price environment.

 

Looking ahead, the long-term coal fundamentals remain supportive, although
demand for the balance of the year remains contingent on the normal restocking
activities in the Northern Hemisphere. The slowdown in global economic growth
may result in coal prices remaining under pressure in the short term. In this
scenario, further production curtailment is likely to aid rebalancing of
supply and demand in the seaborne market.

 

 

Disciplined capital allocation

 

In the first half of 2025, we completed the share buyback announced in March
2025 for a total consideration of R328 million and also paid R1.4 billion in
cash dividends to shareholders. In February 2025, we acquired a further 15%
interest in the Ensham Mine for a total consideration of AUD48 million and we
expect to own 100% of the Ensham Business upon completion of the transaction
with Audley Capital and Mayfair.

 

The Group generated cash flows from operating activities of R1.2 billion for
the first half of 2025 and after investing R703 million in sustaining capital
expenditure*, this resulted in an adjusted operating free cash flow* of R484
million for the period. We continue to cash collateralise our environmental
liabilities over time, and have contributed a further R188 million to the
green fund in South Africa. At 30 June 2025, the Group's net cash* position
was R6.3 billion.

 

Our robust balance sheet position enables us to execute on our core strategic
priorities. We continue to reserve R500 million to complete the Zibulo North
Shaft project and a further R300 million to complete the Lephalale Coal Bed
Methane project.

 

The board remains committed to the dividend policy, which is to distribute a
minimum of 30% of adjusted operating free cash flow* to shareholders. The
board has resolved to return R421 million to shareholders, which comprises of
an interim ordinary cash dividend of R2 per share and a share buyback of up to
R140 million, subject to favourable market conditions. This represents a total
return of 87% of adjusted operating free cash flow* for the first half of
2025. The Sisonke Employee Empowerment Scheme and the Nkulo Community
Partnership Trust will also receive a further R31 million collectively.

 

Given the weak coal prices, US dollar weakness and supply chain risks
following the ongoing trade and tariff uncertainty, the board considers it
appropriate to maintain a cash buffer of R5 billion. The Group holds undrawn
credit facilities of R3.2 billion.

 

In conclusion

 

Thungela is currently in a period of portfolio change. The ability to
successfully execute on our strategic priorities will ensure that we reshape
our business and entrench resilience through the cycle. As we navigate ongoing
complexities in the operating environment and uncertainties in the
macroeconomic landscape, we have conviction in the outlook that high-quality
thermal coal will continue to play a fundamental role in the global energy
demand.

 

Today represents a significant milestone in my journey as Thungela's chief
executive officer, as this is the last set of financial results that I will
deliver. I am deeply grateful to the Thungela board, Group executive
committee, employees, shareholders and stakeholders for your steadfast
support. Together, we have built a sustainable business with long-life assets
across multiple geographies.

 

As we welcome Moses Madondo as the chief executive officer designate, I am
confident that Thungela is well positioned to continue to deliver on our
purpose - to responsibly create value together for a shared future.

 

DIVIDEND DECLARATION AND SHARE REPURCHASE

 

The board has declared an ordinary interim cash dividend of R2 per share,
payable to shareholders on the Johannesburg Stock Exchange and London Stock
Exchange in September 2025 and October 2025, respectively.

 

In addition, the board has authorised a share repurchase of up to R140
million, subject to market conditions. This will be executed in the period
commencing 19 August 2025 and, unless revised or terminated earlier, ending
the last day prior to the Group's next annual general meeting, 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 18
August 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 Interim Financial Statements for the six months
ended 30 June 2025 (Interim Financial Statements 2025), 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 Interim Financial Statements 2025
and does not contain full or complete details. Any investment decisions by
investors and/or shareholders should be based on a consideration of the
Interim Financial Statements as a whole and investors and/or shareholders are
encouraged to review the Interim Financial Statements 2025, 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/TGAInt2025.pdf
(https://senspdf.jse.co.za/documents/2025/JSE/ISSE/TGAE/TGAInt2025.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, 18 August 2025.
Details to register for the conference call and webcast are available below:

 

Conference call:
https://services.choruscall.eu/DiamondPassRegistration/register?confirmationNumber=2631362&linkSecurityString=63eaf3262

 

Webcast: https://78449.themediaframe.com/links/thungela250818_1200.html

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

The condensed consolidated interim financial statements for the six months
ended 30 June 2025 were reviewed by PricewaterhouseCoopers Inc. who have
issued an unqualified review report. The full independent auditor's review
report and Interim Financial Statements 2025 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: 18 August 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

 

 

 

 

 

 

 

 

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