TerraCom Navigates Weather Woes to Deliver 1.6Mt Coal Sales, Eyes 2026 Moorlands Launch

Operational Resilience Amid Challenging Weather

TerraCom Limited (ASX: TER) delivered total coal sales of 1.6 million tonnes for the quarter ended 31 March 2025, maintaining its full-year sales guidance of approximately 1.6 million tonnes despite facing severe weather disruptions. The Blair Athol mine in Central Queensland experienced rainfall levels more than 1.5 times the 10-year average, significantly impacting production and logistics throughout the quarter.

Production at Blair Athol saw a 10% decline in ROM coal and an 11% drop in saleable coal compared to the prior year quarter, yet coal sales slightly increased by 2% to 321kt. The mine’s team demonstrated notable resilience, exceeding productivity targets on dry days and successfully commissioning a new Hitachi EX3600-7 excavator, which has already surpassed expectations and bolstered confidence in the upcoming June quarter mine plan.

South African Operations Show Mixed Results

TerraCom’s South African business unit reported combined coal sales of 1.2 million tonnes, with the North Block Complex and New Clydesdale Colliery contributing significantly. While ROM coal production increased by 10% year-on-year, saleable coal and coal sales declined by 15% and 13% respectively, reflecting ongoing challenges with train allocations that have constrained export volumes. The company is mitigating these logistics issues by executing Free On Train (FOT) mine gate sales contracts with reputable coal traders to secure export revenue.

Financial Discipline and Strategic Advances

In response to the current thermal coal pricing environment, TerraCom’s board decided not to declare a dividend for the quarter ending March 2025. The company closed the quarter with $3.3 million in unrestricted cash and an additional $61.3 million in restricted cash, having fully eliminated its historic tax debt. A confidential US$20 million prepayment agreement was finalized in April with a long-standing customer, providing working capital to support operations through 2026 and 2027.

FOB operating costs at Blair Athol remained steady at $112 per tonne, reflecting TerraCom’s ongoing commitment to cost control and operational efficiency. The company continues to pursue value-yielding initiatives to maintain its position as a low-cost coal producer.

Leadership and Project Development

TerraCom appointed Chris Bourke as Chief Operating Officer in February 2025. Bourke brings nearly 25 years of mining industry experience, including senior roles at Thiess, and is expected to play a pivotal role in enhancing operational performance and capitalizing on growth opportunities.

Strategically, TerraCom is progressing its Moorlands Thermal Coal Project in Queensland through a cooperation agreement with Wintime Energy Group Co., Ltd. The companies are finalizing definitive project documents, with a dedicated Project Development Manager appointed to drive approvals and planning. The project remains on track to deliver first coal by mid-2026, signaling a significant growth milestone for TerraCom.

Market Outlook and Safety

Thermal coal prices during the quarter were supported by prior fixed-price contracts and a stable NEWC6000 index averaging US$104.56 per tonne. The outlook for the June quarter anticipates modest price increases driven by restocking demand in the Asia Pacific region and potential weather-related supply risks. TerraCom expects steady demand from key markets including Japan, South Korea, and India through 2025.

Safety performance remained consistent, with a Lost Time Injury Frequency Rate (LTIFR) of 0.49 and a Total Recordable Injury Frequency Rate (TRIFR) of 1.47, underscoring the company’s ongoing commitment to workplace safety.