Thungela Resources (LON:TGA) outlined a year of strong operational delivery but weaker financial outcomes as lower thermal coal prices and currency headwinds weighed on results, according to comments made during the company’s 2025 annual results presentation. Newly appointed CEO Moses Madondo said the company exceeded production guidance in South Africa and delivered at the upper end of the range at its Ensham operation in Australia, while CFO Deon Smith highlighted the impact of benchmark price declines, a stronger rand, and a large non-cash impairment.
Operational performance exceeded guidance as logistics improved
Madondo said the group recorded 17.8 million tonnes of exportable saleable production in 2025. He attributed the performance to strong results at Mafube, ramp-up at Annea Colliery (previously the Elders project), and recovery at Ensham after difficult geological conditions in the first half. Export equivalent sales also totaled 17.8 million tonnes, up from 16.6 million tonnes in 2024, which management linked to higher export saleable production in South Africa and improved logistics.
Lower coal prices and currency moves pressured earnings; impairments drove headline loss
Management said 2025 benchmark thermal coal prices were materially lower year over year, with Madondo noting benchmark prices down about 15% in South Africa and 22% in Australia. The company also pointed to a weaker U.S. dollar and a stronger rand as additional headwinds.
Smith reported adjusted EBITDA of ZAR 1.2 billion. The company posted a headline loss of ZAR 839 million, and after recognizing non-cash impairment losses of ZAR 8.8 billion across South Africa and Australia, the group reported a net loss of ZAR 7.1 billion. Madondo said the group incurred a loss per share of ZAR 54.64, reflecting price and exchange rate volatility and the impairment charge tied to lower benchmark coal price assumptions and exchange rate forecasts.
Smith emphasized that the impairment is measured at a point in time and “does not affect liquidity or ability to continue operating sustainably,” adding that the impairment largely reflects a write-off of historical capital. He also said the remaining property, plant and equipment balance of around ZAR 12 billion is more reflective of post-listing capital spend than the cash spent on the acquisition of Ensham.
Cash generation, balance sheet, and shareholder returns
Despite the earnings pressure, Smith said the business continued to generate cash. The group produced ZAR 2.4 billion in operating free cash flow, and after sustaining capital spend of ZAR 2.0 billion, reported adjusted operating free cash flow of ZAR 396 million. The company ended the year with ZAR 6.1 billion in cash and net cash of ZAR 5.1 billion after deducting funds held on behalf of community and employee trusts.
Madondo said the board declared a dividend for a ninth consecutive period, although free cash flow generation was uneven across the year. He said adjusted operating free cash flow was ZAR 484 million in the first half but negative ZAR 88 million in the second half, leading the board to exercise discretion. The board approved a final dividend of ZAR 2 per share, totaling ZAR 281 million.
Including the ZAR 281 million interim dividend and a ZAR 139 million share buyback completed after interim results, management said total shareholder returns related to 2025 performance were ZAR 701 million, representing 177% of adjusted operating free cash flow for the year. Smith added that the trusts would also receive a further ZAR 31 million, leaving a cash buffer of about ZAR 4.7 billion, which the board considers appropriate given market conditions.
Costs, capital spending, and hedging impacts
Operationally, Smith said export saleable production totaled 13.9 million tonnes in South Africa and 4.0 million tonnes from Ensham. In South Africa, FOB cost excluding royalties increased to ZAR 1,170 per tonne (from ZAR 1,130 per tonne in 2024), which management attributed to inflationary pressures, lower domestic revenue offsets, and higher selling expenses linked to increased rail activity, partly offset by stronger export production and lower underlying production cost. At Ensham, FOB cost excluding royalties was ZAR 1,435 per tonne, broadly stable year over year.
Total 2025 sustaining capital expenditure was ZAR 2.0 billion (ZAR 1.4 billion in South Africa and ZAR 600 million at Ensham). Expansionary capex of ZAR 1.1 billion was directed primarily toward the Zibulo North Shaft project and the Lephalale coalbed methane project. The company also acquired the remaining interest in Ensham for ZAR 511 million, increasing ownership to 100%.
Smith said net finance income supported earnings, totaling ZAR 2.7 billion and including ZAR 2.3 billion of gains from derivatives over foreign currency, of which ZAR 1.3 billion was realized in cash. He warned that the company does not have the same level of currency protection in place for 2026 and does not expect the tailwind to be as pronounced. In the Q&A, Smith said the company had around $580 million in forward sales remaining at an average rate of about 18.13 rand per dollar, with a portion already converted early in 2026 and the balance expected to unwind through November 2026.
Market conditions, ESG, and 2026 guidance
Madondo said seaborne thermal coal markets were depressed for much of 2025 due to weak demand in key importing countries and sustained supply from major exporters. He noted that late-2024 and 2025 oversupply contributed to weaker pricing, although recent restocking activity and a pickup in India’s sponge iron market provided support for high CV South African coal. Management said weak conditions and linear discounts widened South Africa’s discount to 16.6%, while Ensham achieved a marginal discount of 0.4% due to a higher proportion of fixed price agreements.
On safety and ESG, Madondo said Thungela has operated fatality-free for three consecutive years, though the total recordable case frequency rate increased to 2.83 amid the production footprint transition. He said the company achieved zero reportable environmental incidents in 2025 for the first time since its 2021 listing.
For 2026, management provided the following guidance:
- South Africa export saleable production: 13.0–13.6 million tonnes
- South Africa FOB cost (ex royalties): ZAR 1,320–1,370 per tonne
- South Africa sustaining capex: ZAR 700 million–ZAR 1.0 billion; expansionary capex about ZAR 100 million
- Ensham export saleable production: 3.9–4.2 million tonnes
- Ensham FOB cost (ex royalties): ZAR 1,480–1,570 per tonne
- Ensham sustaining capex: ZAR 500 million–ZAR 700 million
Madondo said production in 2027 across both geographies is expected to be broadly in line with 2026. He also said the company is working with the board on strategy, with a process expected to be completed around June, and indicated the company would consider opportunities where it can add value, including potentially outside of coal, though he did not identify specific acquisition targets.
About Thungela Resources (LON:TGA)
Thungela Resources Limited engages in the mining and production of thermal coal in South Africa and Australia. It owns interests in and produces its thermal coal from mining operations, consisting of underground and open cast mines in the Mpumalanga province of South Africa, including including Goedehoop colliery, Greenside colliery, Isibonelo colliery, Khwezela colliery, Zibulo colliery, Mafube colliery, and Rietvlei colliery. It also holds 85% of the Ensham Mine located in Queensland, Australia.
