Stanmore Resources Limited

I would now like to hand the conference over to Mr. Marcelo Matos, Executive Director and CEO. Please go ahead.

Good morning, everyone. Thank you for joining us following the release of STEMO's 2024 full year results earlier today. To begin, 2024 has been another remarkable year for STEMO, as summarized by the highlights on slide number three. Starting with safety, our rolling 12-month series accident frequency rate concluded the year at 0.3, an increase from the 0.19 in the prior year, but remaining below the latest industry average of 0.69. As pre-reported in the December quarterly, we were very pleased to announce fully-assailable production of 13.8 million tons, above the upper bound of our previously stated guidance and underpinned by exceptional operational performance that has driven raw mining records across all of our core operating assets. FOB cash costs have remained relatively steady, increasing by the US$3 per tonne year on year, supported by the record volumes and contributing to a solid underlying EBITDA result of US$700 million. Overall, the strong financial results for 2024, together with an assessment of our liquidity requirements and the substantial completion of our investment program, has enabled the Board to declare a final dividend of 6.7 US cents per share. This brings aggregate dividends declared for 2024 to 11.1 US cents per share, equivalent to a yield of almost 7% at today's share price. We are very glad to be able to reward our shareholders for their patience over the last couple of years during our investment journey. Moving into the body of the presentation and starting with more detailed look into our safety performance on slide number five. Safety performance was a year of two halves for 2024. Two serious incidents classified as serious accidents were recorded in the first half, increasing our frequency rate to a peak of 0.48 as of 30 June 24, before no serious accidents were recorded in the second half, and the frequency rates subsequently reduced to 0.3 as of December 31, 24, far below the industry average for open-cut mines. The two incidents were both related to line-of-fire hand injuries, which, while serious and have been thoroughly investigated, were thankfully found to be limited in their potential, and we were pleased to see the severity of our incidents reducing as evidenced by a significant reduction in lost time injuries and workers' compensation costs, amongst other metrics. This is in line with an overall injury trend for the year, where we have seen an increase to hand and musculoskeletal non-severe injuries, driving our increased focus on enhancement of our safety practices and targeted awareness campaigns in these areas. On a positive note, we were very happy to receive an award at the Queensland Mining Industry Health and Safety Conference related to safety innovation performance at Poitras. However, overall for the industry, there has been a challenging year safety-wise with multiple fatalities in Queensland, providing a sobering reminder that we can never compromise on ensuring our people return home to their families safe and sound. Before taking a deep dive into the numbers, we'd like to take a moment to reflect on some of the key achievements across our operations on slide number six. 2024 was a massive year with significant intensity of activities at all our sites, delivering record run production at all three sites in unison with execution and delivery of several large-scale projects. Activity at South Walker Creek has been unprecedented, with the addition of three expansion truck and excavator fleets requiring the onboarding of an additional 150 people, And the major projects require more than 1,500 contractors and a significant amount of mobile equipment. Despite this, the all-time saleable production record from 2023 was matched in 2024 with a standout BIM world-class dragline performance, which set a quarterly record in March and closely followed this up with a strong result in December. We have also been pleased to report on various project milestones, including first call from the Y-South box cut in August, the successful completion of the Drag Line 27 conversion to AC, the commissioning of the newly upgraded CHPP in November, and more recently, the handover of the MRH-UC project to operations in early 2025. Port Trail reached new heights in 2024 with the completion of the Ramp 10 box cut immediately yielding benefits with an all-time quarterly run production record of 2.7 million tons in the September quarter. Truck and excavator performance has been best in class at Port Trail, supported by the fleet replacement activities, including two 600-ton class diggers, a 400 ton class digger and a handful of doses lastly the wet weather impacts from early 23 were most severe at the isaac plains complex and the team has been the team has done a remarkable job in recovering the lost volumes to post an annual round production record in 2024. this is due to equally impressive drag line performance at isaac as well as the introduction of a primary mobile crushing unit which enhance overall chpp performance and yield moving on to a more detailed operational performance on slide number seven south walker creek produced 6.3 million tons of clean coal exceeding the upper end of the guidance despite the 14-day shutdown in November for our CHPP upgrade. Crip ratios increased year-on-year, with the advancement of overburden removal ahead of the capacity ramp-up, which was always expected, but also lower ROM mining in December due to wet weather impacts, meaning that cold flows slip into January 25. Cost-wise, FOB cash costs increased $6 U.S. per ton year on year, in line with the plan, and in accordance with the introduction of the additional expansion of fleets in South Walker in 2024. OITRIL set all time records across all physical metrics, ROM, saleable product and sales, which offset loss volumes from the decision to close the millennium complex and facilitated the lower FOB cash costs year on year. As highlighted earlier, this was underpinned by the completion of the ramp 10 box cut, which has enhanced the strike length and enabled the operation of larger loading units, as well as the optimization of haulage paths. The Isaacs Plains Complex delivered saleable production of 2.8 million tons, just below the upper end of guidance, while FOB cash costs increased in line with the plan, as mining as Isaac Downs continues down deep and as opportunities, the opportunistic highest preparation mining continued at Pit 5 North. Importantly, a pathway for life extension at the Isaac Complex was secured with the agreement with Anglo and Exaro in September, which will enable the development of what we are calling the Isaac Downs Extension Project, which combines the acquired area with a resource we already own, approximately six kilometers south of Isaac Downs. Finally, to bring it all together, we are pleased to have reported a total consolidated saleable production of 13.8 million tons, as previously indicated. above the upper end of guidance and FOB cash costs of US$89 per ton below the guided range. I'll now hand over to Shane to briefly discuss the financial outcomes of this operational performance on slide number eight.

Thanks, Marcelo. Looking at FOB cash cost walk forward, we have highlighted our key cost drivers year on year. Overall FOB cash costs are around $3 US per tonne higher in 2024 versus 2023, primarily as a result of the planned additional expansion fleets at South Walker Creek required for the production capacity ramp up. You may recall in previous discussions that we expected incrementally higher consolidated unit costs as a result of introducing these fleets as they increase the weighting of the higher cost truck and shovel volumes compared to the lower cost drag line volumes across that mine. In addition to this impact, higher strip ratios and general cost inflation have been more than offset by higher sales volumes driven by record coal production with 14.2 million sales tons recorded in 2024 and favorable movements in the Australian US dollar exchange rate, which reduced by more than six cents over the course of the year. In 2024, we generated underlying EBITDA of 700 million US dollars. At today's exchange rate, that's an Australian dollar result of around 1.1 billion Australian dollars. The key contributor to the year on year movement in underlying EBITDA has been lower coal prices, which net of other uncontrollable factors such as royalties, foreign exchange and inflation. reduced underlying EBITDA by US$450 million from 2023's record levels. Notwithstanding this, our strong sales volume, particularly from the standout performance at Portrel, has helped partially mitigate this impact. I'll now continue on to the next section of the presentation covering off on our group level financial results from slide 10. This slide provides a high-level summary of our financial performance and balance sheet position on a consolidated basis. I'll save the detail for the coming slides, however we're extremely proud to have delivered such a strong financial result in a year of normalising coal prices. Despite these softer conditions, we are pleased to have maintained a healthy dividend payout ratio, a significant achievement for Stanmore and our shareholders, Especially as 2024 saw us settle some material once off obligations with our final earn out payment for the BMC assets and tax liabilities related to significant prior period taxable profits. We also finished 2024 with a balanced net debt position and total liquidity of over 500 million US dollars or around 800 million Australian dollars at current exchange rates. Looking at the income statement in further detail from slide 11, the lower coal pricing environment mentioned earlier contributed to 11% lower income year-on-year, with higher sales volumes partially offsetting the 21% reduction in average sales price. EBITDA at US$715 million is slightly higher than underlying EBITDA for 2024 as it takes into account the net impacts of once-off items including the gain on a sale of a southern portion of Wadswell, impairment charges mentioned during our half-year results in relation to the Millennium Complex, and other non-operational transaction costs. Final net profit after tax of 192 million US dollars has translated to earnings per share of 21.2 US cents, resulting in a payout ratio to NPAT of over 50% when accounting for aggregate dividends declared in 2024. Moving on to cash flow and the balance sheet on slide 12, excluding taxes and royalties, Stanmore generated over US$1 billion in operating cash flows last year, with just over US$600 million paid in taxes and royalties to Queensland and federal governments during 2024 alone. converting to 924 million Australian dollars contributed by Stanmore to support government funding. When factoring in capital expenditures, largely related to our expansion activities at South Walker Creek, net cash flows after operating activities and CapEx amounted to 364 million US dollars. M&A related payments covered the final BMC acquisition payment to BHP, as well as upfront consideration for transactions related to the acquisition of Eagle Downs and the Isaac Downs Extension Designated Area Agreement. After factoring in M&A, Wardswell proceeds, finance and sundry cash flows, as well as lease principal and dividends paid, Stanmore finished 2024 in a US$26 million net debt position. We view this as relatively conservative following the discharge of material one-off obligations in 2024 as we near the conclusion of our large-scale capital reinvestment initiatives. This slide also highlights the change in Stanmore's debt position year on year, with our 2024 refinancing reverting our debt balance outstanding to a similar position to that as at the end of 2023, but now at lower annual cost, longer maturity date, and a fixed amortization profile. This leaves our assets conservatively geared in a strong liquidity position that provides coverage for working capital requirements over the various phases of the commodity price cycle. Fairmore's financial position has come a long way since the BMC acquisition. So we thought it might be good to highlight now how we have allocated capital since the acquisition in May 2022 on slide 13. As you can see, the capital allocation between shareholder returns, organic growth, net acquisitions and balance sheet allocations has surpassed US$1.6 billion over the past two and a half years, following the acquisition of the 80% of South Walker Creek and full travel from BHP. Please note too that this $1.6 billion in capital allocations excludes more than $1.8 billion U.S. dollars paid in government taxes and royalties over that same period. Net acquisitions include the consolidation of the BMC assets through acquiring the remaining 20% interest in those mines, completion of all remaining deferred and earn-out PHP payments, and the strategic Eagle Downs and Isaac Downs extension purchases, all cash-funded. In addition to acquisitions, we have materially deleveraged the balance sheet with US$551 million of debt repaid and US$315 million reinvested into our business to support higher production volumes and cost optimization through projects such as MRA2C, the South Walker Creek expansion, and Ramp 10 at Portrel, which Marcelo will discuss in more detail shortly. Notwithstanding these investments, shareholder returns have also been delivered during this period, with total dividends declared of around $230 million over the past two and a half years through the consistent application of the dividend policy announced as part of the pre-BMC equity raise in March 2022. This policy continues to provide a balanced approach to shareholder returns, noting that the board retains discretion to periodically assess and optimize our liquidity and consider any surplus accumulated cash and or liquidity requirements in making dividend decisions. As such, the final 2024 dividend of 6.7 US cents per share was declared following consideration of these factors and also in light of the business entering a steady state phase with regards to capital expenditure and debt repayments. On that note, I'll hand back to Marcelo for a more detailed overview of our key capital projects from slide 14.