TerraCom Holds Dividend as Thermal Coal Prices Remain Soft
TerraCom Limited reported a robust September quarter with increased coal production and sales, particularly in South Africa and at its Blair Athol mine, while maintaining disciplined cost controls and deferring dividends amid soft coal prices.
- Coal sales rise 9% quarter-on-quarter to 1.8 million tonnes
- Blair Athol mine production up 24%, but sales dip 12% due to inventory build
- FOB operating costs maintained between A$105–115 per tonne
- No dividend declared reflecting current thermal coal market conditions
- Strategic growth initiatives progress, including Moorlands Project partnership
Operational Resilience in a Challenging Market
TerraCom Limited (ASX, TER) has delivered a solid operational performance for the quarter ended 30 September 2025, underscoring the resilience of its diversified coal portfolio across Australia and South Africa. Total coal sales increased by 9% to 1.8 million tonnes, driven by strong production gains at the Blair Athol mine in Queensland and steady output from its South African assets.
At Blair Athol, the company reported a 24% increase in run-of-mine production and a 15% rise in saleable coal compared to the prior quarter. However, coal sales at the mine declined by 12%, as TerraCom strategically built inventory ahead of the December quarter to manage shipping schedules and market timing. The mine continues to focus on value over volume, supported by a lean cost base and disciplined operational controls.
Cost Discipline and Market Realities
Despite the production gains, TerraCom faced softer coal prices, with the average coal price at Blair Athol falling 5% to A$121.9 per tonne. The Newcastle thermal coal benchmark also declined year-on-year, reflecting broader market softness. In response, the company maintained its FOB operating costs between A$105 and A$115 per tonne, demonstrating effective cost management amid price pressures.
Reflecting these market conditions, TerraCom’s board decided not to declare a dividend for the quarter, prioritising financial flexibility and capital discipline. The company ended the quarter with $4.95 million in cash and an additional $58.2 million held as restricted cash for rehabilitation bonding, with recent reductions in bonding requirements expected to release further funds in the coming quarter.
South African Operations and Strategic Growth
TerraCom’s South African operations showed steady improvement, with coal sales rising 18% quarter-on-quarter, supported by enhanced plant efficiency and logistics. The New Clydesdale Colliery notably increased sales by 65%, despite ongoing rail allocation challenges that continue to constrain export volumes. The company has adapted by increasing mine gate sales to reputable traders to maintain revenue streams.
On the corporate front, TerraCom strengthened its leadership with the appointment of Jen Williams as Chief Financial Officer and Company Secretary, aiming to drive financial strategy and governance. The company also continues to advance its partnership with Wintime Energy Group on the Moorlands Thermal Coal Project in Queensland, targeting completion of commercial negotiations by November 2025.
Outlook and Long-Term Value
TerraCom enters the December quarter with a stable operational profile and a clear focus on sustainable value creation. The updated JORC Resource and Reserve Statement for Blair Athol confirms a mine life extended to 2033, reinforcing the asset’s long-term cash flow potential. While thermal coal prices remain volatile, TerraCom’s disciplined approach to cost control, operational efficiency, and strategic growth positions it well to navigate market cycles and deliver shareholder value.
Bottom Line?
TerraCom’s disciplined execution and strategic focus set the stage for navigating ongoing market volatility and unlocking growth opportunities.
Questions in the middle?
- How will TerraCom manage export logistics constraints in South Africa moving forward?
- What impact will the Moorlands Project partnership have on TerraCom’s production profile?
- Will TerraCom consider reinstating dividends if coal prices stabilize or improve?
