TerraCom’s FY25: $43.4M Loss, $6.8M Impairment, and Moorlands Progress

Financial Results and Adjustments

TerraCom Limited (ASX – TER) has released its audited annual financial report for the year ended 30 June 2025, revealing a net loss of $43.4 million, a significant reversal from the $25 million profit recorded in the previous year. This deterioration was driven largely by material adjustments identified during the audit process, including a $6.8 million increase in impairment charges related to its 49% investment in the New Clydesdale Colliery in South Africa.

The company also finalized equity accounted results for its South African operations, which reduced the reported share of associate loss by $2 million but increased foreign exchange losses by $0.3 million. Additionally, the income tax benefit was revised downward by $4.6 million, contributing to the overall negative earnings per share of 5.33 cents.

Operational Challenges and Segment Performance

Operationally, TerraCom faced headwinds throughout FY25. In Australia, the flagship Blair Athol Coal Mine delivered 2.05 million tonnes of run-of-mine coal, with sales totaling 1.54 million tonnes, below initial guidance due to unseasonal rainfall and logistical disruptions. Despite these setbacks, the mine ended the year on a strong note, producing at a 2 million tonne annualized rate in the June quarter.

In South Africa, logistics bottlenecks constrained export sales, although strong domestic demand helped maintain steady performance at the North Block Complex and New Clydesdale Colliery. The Eloff Project remains shovel-ready, pending finalization of a coal sales agreement with Eskom, South Africa’s state-owned power utility. The company continues to pursue a deliberate divestment strategy in the region, balancing value creation with responsible outcomes.

Strategic Growth and Moorlands Project

A key highlight for TerraCom was progress on the Moorlands Thermal Coal Project in Queensland, Australia. The company signed an Infrastructure Access and Use Deed with Wintime Energy Group Co. Ltd, a Shanghai Stock Exchange-listed partner, formalizing access to critical infrastructure and enabling the development of an integrated dual-hub precinct with Blair Athol. Moorlands is expected to commence production in 2026, with a 25-year mine life and potential expansion to 4 million tonnes per annum, positioning TerraCom for long-term growth.

Safety, Legal Matters, and Corporate Governance

Safety performance during FY25 did not meet the company’s expectations, with injury rates higher than targeted. Management has committed to strengthening safety culture and systems to ensure safer operations. On the legal front, TerraCom resolved a significant case with the Australian Securities and Investments Commission (ASIC), with the Federal Court dismissing proceedings against the Managing Director and former directors. The settlement has been reflected in the financial statements.

Remuneration disclosures indicate no short-term or long-term incentive payments were awarded for FY25, reflecting the challenging market conditions and financial results. The Board continues to review its remuneration framework to align with strategic objectives and shareholder interests.

Outlook

Looking ahead, TerraCom aims to pursue operational excellence, advance the Moorlands Project, and strengthen its corporate culture. The company remains focused on delivering value amid a volatile global energy market where thermal coal continues to play a critical role in energy security. However, ongoing challenges in South Africa and market price fluctuations underscore the need for disciplined capital management and operational agility.