Thungela Declares Interim Dividend and R140m Buyback Despite Challenging H1 2025

Dividend declared and buyback launched as Thungela leans on a strong balance sheet

Thungela Resources has reported a tougher first half, but stayed true to its capital returns playbook. The board declared an interim ordinary dividend of R2 per share and authorised a share repurchase of up to R140 million. That package returns 87% of adjusted operating free cash flow back to shareholders for the period, despite weaker coal prices and a softer US dollar.

Operationally, South Africa delivered more tonnes and rail reliability continued to improve, while Australia’s Ensham Mine wrestled with difficult geology and higher unit costs. Management says full-year guidance remains on track, albeit with Ensham likely to the lower end of its volume range and the upper end of its cost range.

Quick-read: the key numbers that matter

Metric	H1 2025	H1 2024	Change
Revenue	R14,813 million	R16,752 million	-12%
Profit for the period	R248 million	R1,186 million	-79%
EPS	193 cents	952 cents	-80%
Adjusted EBITDA	R691 million	R2,146 million	-68%
Adjusted EBITDA margin	5%	13%	-8pp
Adjusted operating free cash flow	R484 million	R936 million	-48%
Net cash	R6,250 million	R6,683 million	-6%
SA export saleable production	6,438 kt	6,167 kt	+4%
Ensham export saleable production (100%)	1,574 kt	1,884 kt	-16%
FOB cost/tonne excl. royalties – SA	R1,258	R1,189	+6%
FOB cost/tonne excl. royalties – Ensham	R1,694	R1,360	+25%

Jargon buster: Adjusted EBITDA is a cash earnings proxy before interest, tax, depreciation and amortisation, adjusted for specific items. Adjusted operating free cash flow is cash generated after sustaining capex and working capital movements. FOB cost per export tonne excluding royalties is the cash cost to get coal to ship loading, excluding royalties.

What drove the dip in earnings: prices and currency

The price backdrop did the heavy lifting on the downside. Average realised export prices fell 11% in South Africa and 10% in Australia. That, coupled with a weaker US dollar versus the rand, pulled revenue down 12% to R14.8 billion and squeezed margins – adjusted EBITDA margin dropped to 5%.

Two offsets are worth noting. First, South African export saleable production rose 4% to 6.4Mt thanks to productivity gains at Zibulo and Mafube. Second, Thungela’s currency risk management helped – hedging contributed R453 million of cash inflows and R1.4 billion to earnings. Without that, the income statement would have looked leaner.

Operational picture: SA steady, Ensham to improve in H2

South Africa – more tonnes and rail momentum

Export saleable production rose to 6.4Mt with FOB costs of R1,258 per tonne, which is within guidance. Transnet Freight Rail’s annualised run rate improved to 54.3Mt in H1 2025 from 51.9Mt in 2024, thanks to joint industry initiatives and optimisation projects like signalling upgrades. That helps reduce stock build-ups and supports sales.

Guidance is unchanged: South African export saleable production of 12.8Mt to 13.6Mt for 2025, and FOB costs of R1,210 to R1,290 per tonne.

Ensham (Australia) – geology hit volumes, costs to moderate as tonnes catch up

Ensham delivered 1.6Mt (100% basis), down 16% year-on-year, after challenging geology impacted both production and quality. The FOB cost per tonne of R1,694 exceeded the guidance range because the mine incurred costs on run-of-mine tonnes that have not yet been reported as saleable due to quality variations. Management expects those tonnes to convert to saleable in H2.

H2 should be better for Ensham, but volumes are likely to land at the lower end of the 3.7Mt to 4.1Mt full-year range. Costs are expected at the upper end of the R1,470 to R1,580 per tonne guidance.

Cash, capital returns and buffers: a disciplined approach

Despite a leaner P&L, cash generation held up. Operating cash flows were R1.2 billion, sustaining capex was R703 million, and adjusted operating free cash flow came in at R484 million. Net cash closed the half at R6.3 billion after spending R1.2 billion on total capex.

Capital return actions:

• Interim dividend: R2 per share.
• New buyback: up to R140 million, starting 19 August 2025 through to the day before the next AGM, subject to market conditions.
• Previously completed buyback: R328 million (March 2025 announcement).
• Cash dividends paid earlier in 2025: R1.4 billion.

The board is sticking with its dividend policy – a minimum of 30% of adjusted operating free cash flow – and is returning 87% for H1 2025. That is generous, but it comes with prudence: Thungela aims to maintain a cash buffer of R5 billion and has undrawn facilities of R3.2 billion. In plain English, they can keep paying, keep investing and keep a rainy-day fund.

Strategy, projects and portfolio change

This is a transition year for the portfolio. Elders has started producing export saleable tonnes and is ramping up. The Zibulo North Shaft project remains on schedule for 2026 and within budget – key for replacing volumes as Goedehoop and Isibonelo approach end-of-life in 2025. Thungela is also advancing the Lephalale Coal Bed Methane project to demonstrate gas use, and continues to cash-collateralise environmental liabilities (another R188 million funded in H1).

The group increased its stake in Ensham by 15% in February 2025 for AUD48 million and expects to own 100% upon completion of the transaction with Audley Capital and Mayfair.

Market backdrop: short-term pressure, long-term support

Macro headwinds persisted. Geopolitical tensions and tariff escalations have slowed global growth and lifted domestic production in China and India, swelling stockpiles at import hubs and pressing prices lower. Indonesia has trimmed output amid price weakness and weather, Australia saw weather and accident disruptions, and Colombia’s major producers have announced reductions.

For the rest of 2025, demand hinges on normal Northern Hemisphere restocking. If prices stay under pressure, further global production curtailment could help rebalance the seaborne market. Thungela remains constructive on long-term coal fundamentals.

Governance and safety: strong markers

Safety is a standout: the group has operated for two and a half years without a fatality. The CEO baton is also passing – these are the last results presented by July Ndlovu, with Moses Madondo stepping in as chief executive officer designate.

What to watch in H2 2025

• Volumes and quality conversion at Ensham – do the run-of-mine tonnes translate into saleable as planned?
• South African rail performance – sustaining the 54.3Mt annualised run rate would support export sales and costs.
• Unit costs – SA to stay within R1,210 to R1,290/tonne; Ensham at the upper end of R1,470 to R1,580/tonne.
• Price and FX – realised prices and rand/dollar moves will be the main swing factors for EBITDA and cash.
• Capital returns – execution of the up to R140 million buyback alongside the R2 per share dividend.

My take: resilient, but price-sensitive

This is a classic through-the-cycle update. Prices and FX dented earnings, but the operational base in South Africa is solid, hedging helped, and the balance sheet is robust. Returning 87% of adjusted operating free cash flow while keeping a R5 billion cash buffer shows discipline and confidence.

The weaker spots are clear: Ensham’s cost inflation and geology, plus a 5% EBITDA margin that leaves little cushion if prices slip further. The upside catalysts sit in a steadier rail system, better H2 conversion at Ensham, and ongoing portfolio reshaping via Elders and Zibulo North Shaft. For investors, this reads as a patient hold: attractive cash returns backed by net cash of R6.3 billion, tempered by short-term price sensitivity.

Further information

Investors should read the full Interim Financial Statements for the six months ended 30 June 2025, available on Thungela’s website: thungela.com/investors/financial-results. The dividend timetable and buyback details are provided in separate announcements dated 18 August 2025 on SENS and RNS.