Thungela Resources Limited (JSE: TGA, LSE: TGA), a leading South African thermal coal exporter, swung to a headline loss per share of $0.38 (R6.47) for the full year 2025, compared with headline earnings per share of $1.50 (R25.59) in 2024 (using an approximate exchange rate of R17.10 per USD as at reporting date).
Group revenue declined 17% to $1.73 billion (R29.599 billion) from $2.08 billion (R35.554 billion) the prior year. The contraction was primarily due to a 20% fall in realised export prices for South African operations to $78.13 per tonne (R1,336 per tonne), compounded by a stronger rand against the US dollar that reduced the local-currency value of dollar-denominated export sales.
Adjusted EBITDA plummeted 81% to $71 million (R1.216 billion), yielding a margin of just 4.1% versus 18% previously, while adjusted operating free cash flow fell 89% to $23 million (R396 million) from $210 million (R3.589 billion). Export saleable production remained resilient at 17.8 million tonnes overall (South Africa: 13.853 Mt, up 1.9%; Ensham in Australia: 3.985 Mt on a 100% basis), modestly exceeding guidance.
The headline loss excludes significant non-cash impairment charges of $514 million (R8.8 billion) on South African and Australian assets, which drove a basic loss per share of $3.20 (R54.64) and an attributable loss to owners of $416 million (R7.107 billion).
These impairments reflect management’s revised lower long-term thermal coal price assumptions and stronger projected rand and Australian dollar exchange rates against the USD, signalling a structural reassessment of future cash flows amid a market pressured by rising domestic coal production in China and India, alongside growing renewable energy penetration.
Net cash ended the year at $298 million (R5.1 billion), down 42% from $507 million (R8.671 billion), after capital expenditure of $181 million (R3.087 billion).
Despite the downturn, the board declared a final ordinary cash dividend of $0.12 per share (R2.00), bringing the full-year payout to $0.23 per share (R4.00), a 69% reduction from $0.76 (R13.00) in 2024, returning roughly $129 million (R2.2 billion) to shareholders, including buybacks.
This distribution, equivalent to about 69% of the reduced free cash flow, aligns with the company’s policy of paying at least 30% of adjusted operating free cash flow, with board discretion applied amid negative second-half cash generation.
Critical analysis of the figures
The headline loss per share of $0.38 (R6.47) indicates that underlying mining operations generated positive albeit sharply diminished cash flows despite extreme price weakness. However, the $514 million (R8.8 billion) impairment charge, equivalent to roughly 2.5 times 2025 adjusted EBITDA, underscores substantial asset revaluation risk and a more pessimistic long-term outlook for seaborne thermal coal.
The 81% EBITDA decline and 89% free cash flow collapse highlight acute exposure to global benchmark prices, with limited hedging or diversification to mitigate downside. Operational execution remained strong, with key projects (Annea Colliery and Zibulo North Shaft) delivered on time and budget, and 2026 South African production guidance set conservatively at 13.0–13.6 Mt.
With a $298 million (R5.1 billion) net cash position providing a buffer, the decision to maintain dividends reflects confidence in near-term liquidity, yet sustainability hinges on a coal price recovery or further balance-sheet conservation.
In an ESG-focused global market, these impairments may signal deeper challenges for a pure-play thermal coal producer, prompting investors to scrutinise whether current payouts can persist without eroding the cash cushion or requiring strategic shifts.
