Stanmore Resources Limited

Thank you for standing by and welcome to the Stanmore Resources Limited 2025 Half-Year Financial Results Investor Briefing. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Marcelo Matos, Executive Director and CEO. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining the call today as we present our 2025 half a year results. I'm joined here by Shane, our CFO. And we open today's presentation by running through the highlights of the first half on slide number three. Overall, we are really pleased to present our half a year results today, which demonstrates the resilience of our platform in light of the challenging first half operational conditions and a soft market environment generally. Starting with safety, our role in 12 months, serious accident frequency rate reduced to the ultimate benchmark level of zero, which is very pleasing. This is a tremendous achievement for the business and reinforces our strong safety culture and our commitment to safety across all aspects of our business, including the benefits of our focus on targeting lead indicators. As pre-reported in our quarter list, saleable production was 6.5 million tons, which demonstrates the responsiveness of our portfolio. On the financial side, despite the low volumes, FOB cash costs reduced compared to the first half of 2024 and remained within the guidance range of 2025, supported by disciplinary efforts across the platform. It helped to support underlying EBITDA of $147 million, which was impacted by the decline in average realized prices from the prior comparative period. Despite the price and weather impacts to our first half volumes, STEM will continue to generate positive operating cash flows, supporting during the first half the final payment of $61 million to shareholders declared with our 2024 annual results and $35 million of debt repayments under the term loan facility during the period. Moving into the body of the presentation and starting with an overview of the key operational themes for the first half on slide number five. As discussed on our last two quarterly calls, the key operational theme for the first half of 2025 was the extraordinary level of rainfall that hampered operations from February to April. For the chart, Rainfall over this period far exceeded prior year averages, and our operations and logistics networks required a significant amount of recalibration to react to these conditions and keep our full year-guided production targets. Remarkably, our site operations teams managed to navigate these adversities without any serious accidents, facilitating the return of our serious accidents frequency rates to zero for the first time since 2023. We are proud of this achievement, and I would like to commend our site personnel for their unwavering discipline when it comes to continuously improving our safety management systems and processes. On the cost side, the first half of 2025 marked the three-year anniversary of the acquisition of South Walker Creek and Port Trail, so we thought it an opportune moment to reflect and highlight FOB cash cost performance over this period. Pleasingly, since the full year FOB cash costs for 22 of $83 per ton, FOB cash costs have increased just 5% over the entire three years to the mid-range of our initial 2025 guidance, despite the volume impacts resulted from wet weather. Again, this is testament to the quality of our assets. and control cost efforts across the business undertaken this year in light of the subdued market conditions, ultimately facilitating the reduction in full year cost guidance earlier this year. Moving on to some specific site highlights on slide number six. South Walker Creek's ramp up following the completion of a significant capital investment program was temporarily ordered by the wet weather early in the half. However, June showed early signs of the step change in production with record production and above main plate feed rates achieved in the month, including over 1 million tons of rum production in June alone. Cost per ton performance remained robust, reinforcing South Walker Creek's competitive cost position and resilience in various market conditions. whilst the average sales price was the highest of the portfolio, with PCI relativities remaining stable throughout the period. We look forward to South Locker Creek continuing the ramp up through the second half. Port Royal had a standout half, increasing all production metrics on the first half of 2024, despite the wet weather challenges, supported by healthy opening ROM inventories early in the year. This performance is testament to the quality of the operation and site teams, but also demonstrates the fruits of our capital reinvestment into the Renton North box cut completed in mid-2024. The Isaac Plains complex experienced the most challenging half, with the wet weather impacting this single pit more so compared to the other assets. Despite the impacts to coal production, Strong dragline performance over the period will support the recovery over the second half. Overburden removal will be a key focus over the course of the third quarter, which will then de-risk core recovery ahead of another wet season. I will now turn to a consolidated view of this operating performance on slide number seven. As can be seen from the saleable production chart, We have continued to grow volume output year on year, and we remain on track for our previously stated guidance, albeit with a production profile weighted to the second half of the year, and more specifically, tail-ended towards the fourth quarter. We have also seen our product mix adjust towards a higher proportion of PCI, with increasing volumes at South Walker Creek, but also as a result of flexing our mix where possible to align with the prevailing market conditions. For the first half, we saw a prioritization of PCI calls, particularly at our portrayal mine, with PCI providing greater washing yields and relativities holding up nicely, whilst Tier 2 low-vol hard-coking coal relativities traded at much lower volumes compared to historical averages. Encouragingly, through the completion of our major projects at South Walker Creek and Port Trail, consolidated strip ratios have begun to drop despite the expected increases at Isaac Downs. This is despite the weather impacts impacting cold flow during the first half, with further declines expected for the remainder of the year. Turning to the bottom right chart, And despite inflationary impacts and the impact of the sales volumes on the denominator, we have been able to keep year-to-date unit costs flat to 2024 levels. Meanwhile, the average sales price in the first half has reduced by $36 per ton compared to the 2024 full-year average. I'll now hand over to Shane, who will run through our financial performance on slide number eight.

Thanks, Marcelo. Overall, FOB cash costs are around $2 per tonne lower this half versus the first half of 2024, which is a remarkable effort given some of the challenges faced by the business. Notwithstanding the non-controllable impacts of inflation, currency movements and wet weather, we have lowered costs from the same period last year through a combination of savings initiatives and cost deferrals as also mentioned in our quarterly production call. We're also seeing the benefits of our recent capital investment program manifesting in lower costs from mining profile improvements at South Walker Creek and Portrel following the completion of the MRA 2C Creek diversion and Ramp 10 box cuts at those mines respectively. While underlying EBITDA was negatively impacted by US$280 million due to a combination of lower coal prices, foreign exchange, inflation and weather, Stanmore's cost improvement initiatives translated into a US$52 million improvement from last year, allowing us to post half-year 2025 underlying EBITDA of US$147 million. Notwithstanding these efforts, the recovery process continues at our minds and our 2025 performance will certainly be a tale of two halves, as I'll also speak to a little more later. Now, let's cover off on our group level financial results on slide 10. Slide 10 provides a brief snapshot of our financial results. It should be noted that many of these comparisons to the first half of 2024 have been impacted by the material decrease in export coal prices, with Stanmore's actual sales price, or ASP, per tonne around 25% lower, from $175 per tonne in H1 2024 to $132 per tonne in the same period this year. as well as a significant wet weather contributing to 436,000 tonnes of lower sales half on half. Given these significant headwinds, it is a remarkable achievement for Stanmore to have posted almost US$150 million in both underlying EBITDA and operating cash flows for the first half of 2025. This has allowed Stanmore to maintain its strong balance sheet position with 181 million US dollars of cash on hand. That's almost 280 million Australian dollars at current exchange rates, as well as 104 million US dollars of available liquidity as of June 30, 2025. 401 million US dollars of available liquidity. With net debt of just under 100 million US dollars, Stanmore is well positioned to manage through the cold price cycle in the near term, though we continue to remain vigilant during these times of uncertain economic conditions. In terms of cash generation, let's turn to slide 12 to discuss the movements in our cash balances over the half. This chart demonstrates that we generated around US$115 million in operational cash flows. after capital expenditures during the first half of 2025. These cash flows included growth capital of US$22 million for the tail end of the MRA2C and other projects from our recent capital investment campaign. But it also excludes the US$25 million Eagle Down stamp duty payment, as discussed in our June quarterly results. It is once off in nature and treated as an investing cash flow in our cash flow statement and continues to progress through the Queensland Revenue Office objection process. Further this cash generation, we have actually deleveraged the balance sheet further in the first half of 2025 with a US$35 million scheduled term loan repayment and around US$100 million of lease principal repayments. Moreover, we have returned over $60 million to shareholders via the fully franked final 2024 dividend paid in March. This total is almost $100 million in debt repayment and shareholder returns combined in the first six months of this year. In this context, while the Board did consider an interim dividend and applied our dividend policy targeting 50% of free cash flow after debt service to Stanmore's 2025 first half performance, it was ultimately decided to refrain from paying a dividend at this time, given the heightened macroeconomic uncertainty currently being experienced by our industry. Notwithstanding this, the Board remains committed to shareholder returns and will reapply the dividend policy at the end of the December 31 financial year, including a consideration of coal prices and industry conditions at that time. Moving on to slide 13 to discuss 2025 public guidance. Danmore is pleased to reaffirm our full-year guidance ranges at this time. As mentioned earlier on the call, as we recover from the significant wet weather experienced in the first half, 2025 has continued to be a tale of two halves in terms of production. This has back ended our saleable production to later in the second half, as can be seen from the comparison of H1 actuals against the implied first half run rate illustrated on this slide. Furthermore, while we remain confident of landing within the consolidated production range, not all mines are recovering at the same rate. is currently towards the upper end of its guidance range, while Aussie Plains has considerably more recovery risk and is around the bottom end of its saleable production range for the full year. Obviously, any production movements could also have an impact on cost guidance as a US dollar per sales tonne metric, insofar as production shortfalls result in any impact to sales volumes, and depending on what happens with US dollar Australian US Australian dollar exchange rates, although at this stage we are targeting to stay within the top end of the current cost guidance. Given the more modest capital profile in 2025 versus prior years, our capital expenditure guidance remains firmly on track, as discussed further in slide 15. Slide 15 shows the considerable evolution in our capital profile from 2024 to 2025. Following a multi-year capital investment phase in our assets, we're now returning our capital profile to a more steady state position for our business of between 80 to 100 million US dollars per annum. We do still have some projects in the second half, including the commencement of a tailings pumping project at Port Trail, which has a quick payback as it will help mitigate considerable haulage costs for tailings. and the E-Ramp box cut in the newly completed MRA2C area at South Walker Creek, but these are at more modest levels than some of the capital projects we have delivered in recent years. Capital expenditure reductions are also consistent with efforts to respond to current market conditions and preserve cash through this point in the coal price cycle. I'll now hand back to Marcelo to provide an update on our organic growth pipeline on slide 16.