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Thungela Resources Limited, the newly split thermal coal subsidiary of Anglo American Plc, a UK-based mining behemoth, has recovered from last year’s losses, with headline earnings exceeding $440 million at the conclusion of its 2021 fiscal year.
Thungela is a leading pure-play producer and exporter of high-quality, low-cost thermal coal, led by South African mining mogul July Ndlovu.
The firm operated as a branch of Anglo American until its demerger from the behemoth on June 6, 2021, which resulted in a separate listing on the Johannesburg Stock Exchange, as well as the London Stock Exchange.
Figures contained in its first set of full-year results as a separate business revealed that the South African-based company recovered from a loss of R531 million ($35.7 million) at the end of 2020 to achieve headline earnings of R6.66 billion ($447.7 million) at the end of 2021.
Despite a restructuring cost of R229 million ($15.4 million) related to the Anglo American demerger and termination benefits incurred during the period, the growth in earnings was primarily supported by a 601-percent increase in revenue from R3.75 billion ($251.9 million) in the previous accounting period to R26.28 billion ($1.76 billion).
The rise in revenue may be attributed mostly to a 90-percent increase in coal prices, as well as better realized prices, which have been largely offset by a stronger South African rand.
During the review period, the group achieved a realized price of R1,535 ($103.2) per tonne, up from R798 ($53.6) per tonne during the previous year, while the realized price as a percentage of benchmark coal prices averaged 84 percent for the year, up from 74 percent in 2020.
The increase was primarily attributable to market circumstances and the modification of the group’s export equity sales mix, and sales of better margin goods to offset Transnet Freight Rail’s underperformance.
Ndlovu noted that Thungela has effectively transformed from a loss-making group with a net debt position to a profitable, highly cash-generative pure-play thermal coal business.
“Profit for the reporting period stands at R6.9 billion ($463.8 million), following a loss of R362 million ($24.33 million) the previous year. This was driven by solid operational performance and a favorable price environment. Our net cash position at year-end was R8.7 billion ($584.8 million),” he said.
As a result of the company’s strong financial performance in 2021, the board declared a first-ever dividend of R18.00 ($1.21) per share, with the intention of returning R2.5 billion ($168.2 million) to shareholders.
This represents 63 percent of its adjusted operational free cash flow by the end of 2021, significantly over the dividend policy’s minimum payout of 30 percent.
