Full Year 2026 Bathurst Resources Ltd Earnings Call
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Speaker #1: You have not entered any numbers. Please re-enter the meeting passcode followed by pound. You have not entered any numbers. Goodbye. Our focus in capital management, definitely the period of time when we have paid dividends and done share buybacks in the past, but at the moment it's really about trying to have sufficient capital to sustain operations safely and profitably.
Speaker #1: And really, what we're doing is looking up to 12 months out, building up a book and trying to lock in super profits. Because we've got no debt, we don't have to book or worry about a floor.
Speaker #1: It's more about trying to, when we see a parcel that's attractive, we pick that parcel up. And we've got a close association with our existing suppliers, and we're also maximizing our shipment schedules to reduce our cash flow volatility.
Speaker #1: So, just looking in a bit more detail at the New Zealand operations, we've got the two operations, Maramarua and Rotowaro in the North Island, which are domestic mines, and they supply steelmaking coal mainly into New Zealand's only steel plant.
Speaker #1: A little bit of coal is going into power generation through the Huntley plant. We’ve got Stockton, which is 100% export, exporting out to South Korea, Japan, India, and a little bit into China at times, but predominantly into India, South Korea, and Japan, as I said.
Speaker #1: And then we've got Takatemi, down south, which is really in its last couple of years supplying processing coal into value-add to prime production.
Speaker #1: So that's dairy plants, amateurs, that sort of thing. Food manufacturing mainly. Across those, we've got various timelines in terms of life. Rotorua's got about two and a half years left to go.
Speaker #1: In its existing guise, there is another growth project, but really we're struggling for customers for that one. Mamorua, we've just got the M2 extension.
Speaker #1: Consented for another 3 years at 180,000 tons a year. Stockton, obviously, is the subject of the BOLA project expansions, with about 3 years left in the existing holding.
Speaker #1: The BOLA project is obviously an expansion, and we've got two years left at Takatemi. So, we are actually quite heavily into the rehabilitation final sort of staging for Takatemi, while we produce the last of the coal out of there over the next couple of years.
Speaker #1: So, just looking at the financial results, revenue is pretty much in line with what we achieved in 2025. Obviously, we had a guidance of $35 to $45 million—very pleasing when we came in at the top of the guidance at $45 million EBITDA consolidated for Bathurst in this financial year.
Speaker #1: Consolidated cash is down a little bit from the same time last year. We've got $145 million in consolidated cash, including short-term deposits. That was at the end of June.
Speaker #1: Mainly because we've been spending money on these growth projects. We've got Tanas, we've got BOLA, and then within the joint venture, we also spent quite a bit of cash doing the final hurdle of overburden for Rotorua, which will now be paying dividends over the next couple of years.
Speaker #1: Profit was down about $9 million, so we ended up with a $5 million loss for the financial year. Again, quite a lot of that was because of the growth of these projects, but also we had a write-down of some of the remaining asset, mainly waste in advance in Takatemi.
Speaker #1: We had a number of low-level incidents across the year, which is really disappointing across all the operations. We've had a longstanding field leadership program, which we did a complete review of.
Speaker #1: And really, the key takeaway was that the program itself was working well, but it was really being underutilized. So, yeah, the key takeaways from the review were to reward quality rather than quantity of these interactions.
Speaker #1: So, safe work interactions—and drive the need for everyone to participate. It's not a voluntary scheme. The other important milestone was an extensive upgrade to our training system. Basically, all records are now in a single database, which gives us a lot more transparency.
Speaker #1: The next phase of that—two mines have already started rolling out e-learning, which is then utilizing that same database system to actually allow us greater efficiency of our training hours.
Speaker #1: And then, on the other end of the spectrum, looking at the critical risk program that's been rolling on now for about six months—we've got one mine left to go to bring that in.
Speaker #1: It's a really good program, and it's really helped the operational teams in particular, and the risk owners, to concentrate on control of fatal risks.
Speaker #1: So, just looking at the guidance for the year ahead, we're anticipating a very similar range—somewhere between $30 million and $40 million EBITDA for the year at Bathurst level.
Speaker #1: There's some unders and overs again. Export pricing looks pretty flat, but we are getting sort of towards the end of the reserve base within Stockton.
Speaker #1: And so, some of the product mix is going to be at a lower pricing against the low-vol benchmark. So, we are going to see a slight decrease in the amount of EBITDA generated out of Stockton.
Speaker #1: We will see an increase out of the North Island operations. As I said, we've gotten over that large hump of overburden, and we'll start repaying some of that back.
Speaker #1: And then the South Island domestic, Takatemi was in that final couple of stages, and so we're looking to really, while we've got all the operational team there, we have only got about 12 people left.
Speaker #1: Out of 25, over the last 12 months. And we're looking to try and complete the rehab there at the same time. So we're looking at a guidance maximum of around $40 million for FY27.
Speaker #1: It sort of fits in well to where we've been over the last—well, really since 2018, when we took over the Solid Energy assets as part of the joint venture operations.
Speaker #1: Obviously, we're heavily dependent on the international coal price for those export pricing. We'll never set that, but we are anticipating another good, positive year this year.
Speaker #1: Again, the forward curve is looking reasonably flat, but at a really good level. I mean, we're seeing pricing out to $260.
Speaker #1: Twelve months out, and we are locking in some of that, as I said before, under a hedging program. The key driver at the moment seems to be actually coming from China again, whereas India is still going through a significant drop-off in demand through the monsoon season.
Speaker #1: But we are seeing quite a significant lift in imports into China. Particularly, there have been a couple of quite large or significant mine safety incidents that have occurred in China, and there has been a crackdown within the country.
Speaker #1: So I think, longer term though, everyone is still looking for India to be the major uptaker of the international coal on the market.
Speaker #1: With new plants and new coal carbons coming online over the next couple of years, let's look ahead at our projects. So, obviously, again, going back to our strategy, we have got existing operations, as we've seen, generating good levels of EBITDA.
Speaker #1: But give us that sort of experienced operator base, a series where owner-operator across all of our operations. And we want to continue that into our expansion projects.
Speaker #1: So, M2—already spoken about that. We've got another three years through that, recent resource consent, so that's a good sign. The Bola project and Tanas have both moved on to the next stages, and I'll talk about that as we go through. And Cramout is moving on as well into the next phases of it.
Speaker #1: Environmental assessment work. So, if you look at the BOLA project, it's really about trying to build on the infrastructure that we already own and have already existing and already producing, and getting to the market on.
Speaker #1: So, to the north, we've got the Stockton Complex. That contains, obviously, all of the CHPP—the coal handling and preparation plant—the coal handling facility, the haul road, and the aerial to get the coal onto a train.
Speaker #1: And then, obviously, we've already got existing relationships in terms of rail and port, and customer base. So the idea is then we'll join two other areas of development: Mount Fridge South and the Scottman Extended on the Denison Plateau.
Speaker #1: With a dedicated haul road, which will then allow us, over a series of a couple of years, to bring on further tons and then increase the overall revenue by getting the blend back up to where it was before—somewhere around about 80% of the benchmark—as we have enjoyed over the last few years.
Speaker #1: So, working there's about 90 million tons of additional production will come out of that. And we're aiming for about between 1.1 and 1.2 million tons a year.
Speaker #1: Relatively low startup capital, about NZ$100 million, and a good positive NPV. So, looking at the production profile, the orange on here is the remaining tonnes within Stockton.
Speaker #1: And obviously, slightly limited with the BOLA project coming on. And then also with the Stockton Extended—sorry. And then with Mount Frederick South as well.
Speaker #1: And we do need to run these sort of concurrently and together. It's always been a blending exercise out of Stockton. There's quite a lot of variability across the quite small coalfield.
Speaker #1: And we need to have, really, the three mining areas open at any one point in time to be able to make sure we can meet the needs of the customers and also maximize the revenue by maximizing the yield against the benchmark.
Speaker #1: So again, it'll utilize existing infrastructure very much through Stockton—existing rail and existing path to existing customer base—and sort of pegging it at around about that 1.2 million tons.
Speaker #1: So where we're up to, the application has been submitted. That's a really key milestone. So that was actually—we started uploading it last Friday, the 21st of August.
Speaker #1: It was completed and confirmed by the EPA, which meant it was the fast-track process on the 24th. Then the application gets sent out to the regulators.
Speaker #1: The regulators then get five days to comment on whether they feel the application has met the Act, in their terms—so, whether it's complete under the Act.
Speaker #1: The EPA has got 15 working days to make that assessment. There's another couple of tests in there in terms of whether you've got competing resource consents.
Speaker #1: For the same activity over the same land, which we know we haven't. And then, once we get through that completeness test, that then triggers a set of very strict timelines.
Speaker #1: And one of the key ones is for the expert panel to be convened. So we're looking for that first conveners meeting to be sometime in early October.
Speaker #1: Assuming we can get through the completeness test within that timeframe, there is a likelihood of requests for information, or RFIs, to come through if they feel there's some additional information required.
Speaker #1: So, we can't really say that's going to be set in concrete for timing. What I'll do is update the market as soon as that occurs.
Speaker #1: Because that then triggers, as I said, the actual timeline to get to the end of this thing. And they are very fixed and very tight timeframes.
Speaker #1: But with some ability to extend those if there are extenuating circumstances. But again, it's a really good milestone. One of our guys did say it's like we've been training for the marathon.
Speaker #1: For about the last two years since the Fast Track Act came in—and a lot longer prior to that—withdrawn, obviously. The BOLA project's been in our portfolio since 2010.
Speaker #1: So this is not a fly-by-night sort of operation. It takes about 12 months to get through it. So we've got the submission in. We anticipate we're going to get somewhere between a 140- and 160-day assessment period.
Speaker #1: And again, we will then be out of it probably a little bit later than this month next year. The good thing about fast track, though, is when we come out of that, we will actually have our mining permit, we'll have all of the consents, all the resource approvals.
Speaker #1: That we're required to actually go mining. So I suppose the next key steps are updating the PFS to a DFS level. And there are some early works that we'll look to get onto in the second half of FY27.
Speaker #1: Mainly around geotech and road designs, and some of the things like the water treatment plants and stuff like that, to give us a bit of a head start.
Speaker #1: But really, the critical thing is getting through the fast-track process. With TANAS, again, we've reached a significant milestone. Obviously, we updated the DFS late last year, in October.
Speaker #1: We're aiming for about three-quarters of a million tons of semi-soft coke and coal product. It's close to port, in Canadian terms, out through to Ridley.
Speaker #1: And we are right on the railway line with our own block of land. Again, about $140 million—this is a total greenfield site, $140 million startup capital.
Speaker #1: It's going to have a low cost of production because it's a low strip ratio mine. We're going to be mining at less than a 4:1 strip ratio through most of the blocks.
Speaker #1: Good, solid NPV—post-tax of around $270 million. So again, the exciting part here is that we've been through the information request phase with the Environmental Assessment Office.
Speaker #1: We've now submitted the environmental certificate. It's been accepted for assessment. Now, that assessment period is a set 150 days. That's not working days; that's an actual set timeframe.
Speaker #1: And then there's a 30-day assessment decision period after that. So there's 180 days to a decision, either for or against. And we believe at this point in time that'll definitely be Q4.
Speaker #1: So again, we'll be looking to have that decision January–February next year, assuming that timeline continues on. Normally at this phase, there's not a lot of requests for information, because we've had an extended period of that, with each of the regulators requesting information and replies going back.
Speaker #1: And so we're looking to, and reasonably confident that we will, get that certificate issued in a timely manner. So how that fits in, though, with the certificate—we then have got to apply for a mining permit.
Speaker #1: And so there's about a nine-month period of work required to get that mining permit in place, and then submit it for approval. We really can't do that in parallel.
Speaker #1: It's very much a series, because we've got to see what the final conditions that come out of the environmental certificate are, then feed very much into the mining permit.
Speaker #1: And the mining permit then deals with all the usual matters you'd imagine a mining permit would: geotech stability, health and safety aspects, some environmental aspects, but mainly the actual operation of the mine.
Speaker #1: And how we're going to carry out the conditions that have been set through the environmental certificate. So again, we've got a bit of a forward program that we're looking at in terms of the access road, mainly establishing a bridge which will go over the Talca River, which will allow us access to the site.
Speaker #1: And then, going on from there—so just really recapping where the position we're up to in terms of the company as we stand today.
Speaker #1: So, we've got $152 million in the bank as we stand at the end of July. That's in New Zealand dollars. We've got zero debt.
Speaker #1: We're anticipating we're going to earn somewhere between 30 and 40 for this next financial year. In terms of New Zealand terms, we've got a $1.48 net asset backing per share.
Speaker #1: And then to bring that back to our share price, obviously today we're at $0.45. We've got a cash backing of $0.53, and we've got an asset backing of $1.23.
Speaker #1: So there's a strong business that sits below this, and a lot of prospects looking forward. So again, to recap the same thing: profitable operations.
Speaker #1: We've got the BOLA project, which has now had the application submitted on the fast track. Metallurgical coal is listed as a New Zealand critical mineral.
Speaker #1: We've shown that it's a good project. In terms of the PFS, we've just got to update that now with a more refined DFS. And we're looking to be producing in late 2028 into 2029.
Speaker #1: The TANAS project—very similar sort of basis. We've now started the race for the environmental permitting, and we're looking to be producing there in 2029.
Speaker #1: We hold good cash in reserves. Obviously, the BT development side of the BOLA project is fully funded. And then we've got additional opportunities for growth.
Speaker #1: So, why should you invest in Bathurst? We've got more and more of our revenue coming from steelmaking, and we've got a portfolio that's going to deliver a large number of assets or double our capacity at the Bathurst level.
Speaker #1: ...into coke and coal. There's global recognition, not only in New Zealand but also in the US and in Europe, that metallurgical coal is in short supply.
Speaker #1: And those prices are only going to increase. And it's of critical importance to steelmaking. We've got good operations that we can show regulators and our communities that we can operate safely within a good environmental footprint.
Speaker #1: We've got a good balance sheet that we can build on. We've got strong cash reserves. And we've got near-term production within New Zealand and British Columbia at relatively low cash levels.
Speaker #1: So again, thanks very much for your attendance. I apologize for the bit of delay in getting the presentation to you up front. But no, look, I look forward to updating you again once we get through this completeness phase in the next month or so.
Speaker #1: There's a key milestone for the company. But again, I can't understate how important it is to get in these races, both in terms of TANAS and BOLA.
Speaker #1: We're now very much in front of the regulators, and we've started the process. So I'm really looking forward to continuing on with that. Thanks very much for your attendance.
