I would now like to hand the conference over to Marcelo Matos, Chief Executive Officer and Executive Director. Please go ahead.
Morning, everyone. Thank you for joining today's call as we present our half year results for 2026. I am joined once again here by our CFO, Shane Young. First half of 2026 was certainly challenging, with considerable wet weather early in the year impacting operations, together with macroeconomic cost pressures arising from the Middle East conflict. However, metallurgical coal market conditions have been much improved compared to this time last year, and I am pleased to report that this, combined with a rebound in operational performance through the second quarter, has delivered a solid half year result, as highlighted by a few of the opening snapshots on slide number three . Starting with safety, our serious accident frequency rate of 0.51 remains well below the latest industry average, continuing our consistent record of being ahead of benchmark performance for open cut coal mines in Queensland.
Production has been pre-reported in our recent quarterly update. To recap, the half was characterized by a strong recovery in run-of-mine volumes in the second quarter, following the weather-affected first quarter, which has supported sellable production of 6.5 million tonnes, in line with the first half of 2025. Despite the expected second half weighted production and sales profile and the macroeconomic headwinds that Shane will unpack shortly, FOB cash costs of $101 / tonne sit around the midpoint of our guidance range. Operational improvements and cost discipline across the portfolios, together with improved market conditions, contributed to underlying EBITDA of $174 million, up from $147 million in the prior year. After the end of the half, we also completed a reset of our capital structure through the refinancing of our debt facilities.
This removes the scheduled term loan amortization through to maturity and provides greater balance sheet flexibility of our capital allocation priorities and future growth opportunities. Moving to the performance of each asset on slide number four. With sellable production of 3.1 million tonnes, the production profile at South Walker Creek is planned to be second half weighted, reflecting the weather, routine maintenance, and a deliberate investment into stripping in the first half. The implementation of our Chase the Blue strategy is tracking ahead of schedule, which we expect to support stable strip ratios in the coming years. Poitrel delivered another strong half with 2.5 million tonnes of sellable production as the operation continues to exceed initial expectations since the investment into Ramp-10 North. Furthermore, strong opening inventories, together with improved wet weather preparedness, helped to buffer the impacts of the significant first quarter rainfall.
Year-to-date, Poitrel is tracking ahead of the annual run rate of guidance, and we are glad to report that the CHPP tailings pumping project was completed in March, and the truck rebuild program is tracking ahead of schedule. As previously explained, over at Isaac Plains complex, there has been a deliberate shift to a value over volume strategy focus during the ramp down of the existing Isaac Downs operations while we progress the Isaac Downs extension, which will be supported by Stanmore having taken over operational responsibilities as of July. With that, I will now hand over to Shane to discuss our financial results from slide number five.
Thanks, Marcelo. In looking first at the FOB cash cost walk forward, it is important to note that if we exclude the external impacts of foreign exchange, inflation, and fuel, underlying cash costs actually declined from the same period last year. Year on year operational cost improvements of approximately $4 / tonne have been realized, which, after allowing for volume impacts, reduced the comparative FOB cost to around $87 / tonne before macroeconomic impacts. Higher fuel prices, adverse foreign exchange movements, and annual inflation then added approximately $14 / tonne, resulting in FOB cash costs of $101.2 / tonne for H1 2026. The cost savings are a testament to the operational improvements across South Walker Creek and Poitrel, which, together with the change in strategy at the Isaac Plains complex, has more than offset the impact of planned lower volumes.
Translating this to underlying EBITDA, higher realized pricing contributed approximately $112 million to the EBITDA improvement, but this was substantially offset by approximately $110 million of foreign exchange, inflation, and fuel cost headwinds. Importantly, approximately $25 million of operational improvements provided an additional benefit, and were therefore the principal driver of the overall increase in underlying EBITDA from $147 million - $174 million for the half. Turning now to cash flows and the balance sheet on slide six. Before capital expenditure and shareholder returns, operating cash generation moved us from an opening net debt position of $33 million to a pro forma net cash position of approximately $49 million. Then, after $120 million of capital allocation for reinvestment in the operations and shareholder returns, we closed the half with $72 million of net debt.
This remains at very manageable levels for the size of our business, with conservative gearing supported by positive operational cash flows, post leases, despite the second half-weighted production profile and diesel pricing headwinds. Notwithstanding this, and consistent with our focus on disciplined capital allocation, the board has not declared an interim dividend with our half year results. We remain focused on delivering sustainable shareholder returns, and will continue to assess distributions as our cash generation and capital requirements evolve. In the meantime, retaining additional liquidity at this time preserves balance sheet flexibility as we consider our near-term growth opportunities and capital requirements. That balance sheet flexibility has been further strengthened by the successful debt refinance completed after June 30, supported by a syndicate of high-quality domestic and international banks. The strong banking support received allowed us to improve pricing, extend maturities, and materially improve the structure of the facilities.
Specifically, the refinancing lowers pricing on both the term loan and senior revolving facilities by 100 basis points going forward. The drawn term loan was also upsized to $250 million and restructured to remove the scheduled repayments of $70 million per annum, while we extended both the maturity of the $200 million senior revolving credit facilities and a $70 million gear working capital facility by a further 18 months and two years respectively. Moving on to guidance on slide seven. We are pleased to reaffirm our full year guidance across all metrics. As previously highlighted, sellable production is tracking towards the top end of the 12.8 million - 13.4 million tonne range, with strong closing inventories setting up our operations to deliver well on the second half.
FOB cash costs of $101 / tonne are currently at the midpoint of guidance and will be supported by the higher volumes and lower strip ratios in the second half. That said, we will continue to monitor the macroeconomic environment, particularly movements in fuel prices and foreign exchange, which seem to change on an almost daily basis. Capital expenditure was $39 million for the half against full year guidance of $85 million - $95 million. The program is second half weighted as we ramp up the implementation of the Chase the Blue strategy in H2, especially in relation to the preparation of the new pits to be mined in the MRA 2C area. With that, I will hand back to Marcelo to take us through the growth portfolio and market conditions from slide eight.
Thanks, Shane. Our organic development pipeline is underpinned by a significant reserves and resources base of 571 million tonnes and more than 5 billion tonnes respectively. Our key focus remains on each of the Isaac Downs extension, Eagle Downs and Lancewood, and we have sought to set out the key milestones for each of these projects on slide number nine. For the Isaac Downs extension, the focus remains squarely on approvals. In the best case, we are looking at receiving approval by the end of 2027, at which point we can commence an approximately 12 months construction period for the haul road connecting the new pit to the existing haul road at Isaac Downs, bridge over the Isaac River, flood protection levees, and an initial box cut in the southern extension area.
We were encouraged by the recent news that the adequacy review stage of the environmental impact statement has been satisfied approximately two months ahead of schedule. Turning to Eagle Downs, I am pleased to share some good news received recently. You may recall that during the June quarter of 2025, we paid AUD 38 million in stamp duty and that we have lodged a formal objection to that assessment. We have recently been advised that our objection was successful, and as a result, we expect to receive a refund of approximately AUD 35 million in the near term. We are very pleased with this outcome, not just financially, but because Eagle Downs remains an important project for the future of the industry here in Queensland.
For the project itself, we are ramping up the pace again with a view to finalize the ongoing studies in the first quarter of next year. The timing for development and the production ramp-up at Eagle Downs has always been anticipated for early next decade, but it could certainly be accelerated if desired and if the right conditions align. In light of this, we are ensuring project readiness to preserve timing flexibility within the portfolio strategy. If and when we decide to proceed, we currently envisage approximately 30 - 36 months from FID to first longwall coal. The first priority once and if an investment decision is made, will be to complete construction of the access drift, which is already approximately 40% complete, and sink the ventilation shafts to get to pit bottom.
Finally, at Lancewood, now that the mine layout has been confirmed following the positive results of the 2025 3D seismic campaign, the priority has shifted to completing the pre-feasibility study and establishing a maiden reserve statement, which is targeted for the first half of 2028. Subject to those outcomes, we will then move into a definitive feasibility study, and in parallel, we will progress the environmental studies to support the required regulatory approvals. Moving on to a brief of the market on slide number 10. Overall, we have been glad to see markedly improved conditions from this time last year. This has been predominantly supply-driven with the Australian weather-related disruptions early in the year and outages in China, with ongoing production controls following the Shanxi accidents in May. Given this, the market remains relatively tight, despite this being a seasonally low period amid the Indian monsoon season.
In the long term, on slide number 11, India is expected to remain the growth engine for seaborne metallurgical coal demand, and continuity of supply from the seaborne market will be paramount to their steel capacity growth ambitions. Meanwhile, we expect that the supply side will remain structurally challenged by increasing strip ratios, rising costs, and challenging regulatory policy settings. Further, the supply and demand balance is forecast to be dependent on new supply, even within this decade, and that new supply must compete for capital in a challenging investment landscape. This is something that will need to be delivered in the context of an Australian production profile that has been in structural decline since 2012. Overall, as metallurgical coal reserves become increasingly scarce, we believe this positions our portfolio, and particularly our development pipeline, very well.
That concludes our prepared remarks, and I will now hand back over to the moderator to handle the Q&A session. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Brett McKay with Petra Capital. Please go ahead.
Thank you, and good morning, team. I am going to jump straight to the growth aspects of the business, because obviously that has now moved into a bit more focus. If I just start on Isaac Downs extension for a sec. Obviously, you have been through this process a few times before with incremental expansions and new pit developments at Isaac Plains. Can you just remind us what is different this time around, if anything, around the permitting and approvals environment, maybe both on the positive and the negative side?
Brett, maybe I will talk to the positive side of things first. Things are progressing extremely well, as far as the interactions with the departments in Queensland are concerned, and to a certain extent at federal level, so it has been pretty constructive. Things are progressing well. As far as we can get, let us say, support and contribution from regulators in coming back to us within or earlier than the statutory response periods, they have been doing that. I think it is a tight schedule, but it has been really productive, which is good news. I think on the negative side, I think obviously, there is always concerns around potential delays as a result of objections to the mining lease and the environmental authority that could lead to, for example, Land Court processes, which is probably, usually one of the key risks.
It is a project that it is not Greater any disturbance than what we are doing in Isaac Downs. We have a great relationship with the Isaac Regional Council, with the Barada Barna people, with landowners in the area. So I think as far as directly affected persons, I think we are in a pretty good shape. I think we are confident in that space. Overall, I think it is so far pretty positive, Brett. I think we need to, of course, see what happens when the project goes for public consultations.
Can you remind us when that is?
Happening as we speak.
Yeah. Okay, cool. Thanks, Marcelo. Just if I jump over to South Walker Creek quickly. Again, just given there is capital investment going into the Chase the Blue strategy, and there seems to be a bit of a second half waiting coming through this year. Can you just again remind us exactly what that strategy entails and really what it's meant to deliver over that period of time and certainly into next year and beyond? You mentioned earlier in your presentation the ideal or sorry, the outcome being delivering stable strip ratios. But maybe just a bit of a recap on what you're spending the money on this year and just how that's going to deliver those outcomes over a fixed period of time.
A bit of money this year into dewatering and demuddying the F and G pits. Focus later this year is going to be on the G-North pit, which is going to be the first to be mined. Dewatering, if you just recall, those pits had been mined in the past and mining have ceased when, of course, they approach the creek. We have diverted the creek as part of the MRHC project, and those pits were basically water storage for many years. So we are now having to dewater and move water to other pits and demud the F and G pits, starting with G-North, where the mining will start. Things are progressing well, actually ahead of what we were planning, which is good news. Actually, we're going to already mine some ROM coal from G-North.
That is basically when we talk about a little bit of capital that has been accelerated in that area. That is pretty much what it entails. As far as Chase the Blue is concerned, as explained in the past, it is about focusing and accelerating mining in the Mulgrave area, which is the MRHC area. The idea is that we are going to send the two draglines there faster than previously anticipated and concentrate, let us say, a maximum number of fleets in that area to maximize area in those low strip ratio pits. Obviously, there is only as much we can fit there. That will mean that some other central pits, like the Z-North pit, for example, that was usually mined with a dragline, will become a bit more marginal with trucks and excavators, depending on coal prices.
Chase the Blue will basically mean accelerating mining in the Mulgrave area, making the, let us say, bring it forward more cash flows for the next 5± years . Potentially not necessarily have to stretch limits on volume because we will be able to park a couple of fleets at South Walker Creek, which means we will not be bottlenecked as much by the wash plant. This may represent opportunities with a plant that is not going to be as bottlenecked to look at opportunistic volumes depending on coal price scenarios. This could also bring an opportunity for us. We are looking at a proof of concept potentially for a ring-fenced autonomous trial at Z-North, which will become a more competitive pit if we are able to basically have autonomous trucks, where of course, we would expect to have lower costs.
A few things we are looking, but I mean, Chase the Blue is basically generating more margins in the next five years by maximizing volume in the lower strip ratio areas and opening up some opportunity for us to, let us say, to capture good market prices or some opportunistic mining some other pits, depending on, of course, margins.
Would you say that the steady state case would be keeping output levels at that maximum rate, but cash costs being maybe a little bit better, all things being equal? Would that be sort of a five-year window that we are looking at of that sort of stable outcome?
Not necessarily. I think in the next two years, probably output levels will be similar, above 9 million ROM, and close to 7 million product. Okay? Between 6.5 and seven product. But as we park fleets as a result of focusing on the Mulgrave area, maximizing mining there, that's one of the key cash drivers here. It's about freeing up cash by not necessarily having to have the same truck and pre-strip capacity. Okay? So we may see actual volumes slightly lower if you look at maybe not in the next two years, but maybe year three or year four, year five from now, but making higher cash flows. So actually making more cash by producing slightly less. And it's a much lower risk plan, which significantly lower risk because we are not pushing the wash plant and requiring every single operating hour.
But on the other hand, it creates opportunity. So we are actually looking at that as an opportunity because we are looking at if we can free up some of that wash plan capacity, where else can we go and mine some coal in the deposit to benefit from that spare capacity. Okay? So there's a lot going on there, but on a standalone basis, Chase the Blue is about mining higher margin coal within the next few years, but not necessarily having to produce or push the plant as much as we do now.
Mm-hmm. Yeah, okay. Understood. And just finally, if I might, on Lancewood, given that you have moved that project into the PFS stage, is it possible to give us a bit of a high level overview of what sort of production outcomes you might be looking for? I appreciate that there's still a fair bit of water under the bridge and it is longer dated in the portfolio. But just in terms of what you would be looking at in the PFS as a standalone development, can you sort of talk us through that at this point or is it too early?
A bit too early, Brett, but what I can say is 3D seismic results were really positive. Usually with these things, especially with seismic, the more you look, the more you'll find. We actually didn't find a lot more in terms of major faults or structure that could be detrimental to productive longwall mining. Okay? So a lot of the historic structures being just validated, which means layouts and conceptual cases are. There are no fatal flaws, okay, from a structural standpoint, which is positive. Coal quality is probably, if you look at from a portfolio standpoint, is probably the best coal quality we have. I think one of the issues there is approvals, right? Where we have Eagle Downs with all the regulatory approvals that it requires, other than just the whole road to connect to Poitrel, which is a much simpler set of approvals.
Lancewood needs to do a full EIS. We need to do a lot of ecology and groundwater modeling to earn progress state and federal approval. It is still a few years away. We need to do more work to define the resource as well. From a coal quality, we need to get more maiden draw reserve statement, as I said. The potential there is a longwall operation. It is reasonable thickness, if you look at the target in the Alameda seam. We are looking at a longwall, wider blocks, and it is anywhere between 4 tonnes, 4.5 tonnes, 5.5 tonnes or 6 million tonnes per annum. I think there is more work we need to put there, depending on the length of panels, premium quality hard coking coal.
I think the interesting thing there is cheap access because actually rather than having to sink drifts for access, it is just a box cut, a large box cut with quick access. That is probably one of the advantage of the project. So where we do not have the benefit of having the Poitrel infrastructure to support the project, what we do have as a positive is cheap access and easy access. But still a lot of work ahead of us and a few years ahead if you compare with the likes of Eagle Downs.
Understood. Thank you. I will leave it there.
Thank you. The next question comes from Glyn Lawcock with Barrenjoey. Please go ahead.
Morning, Marcelo. You said that you have gone to the public review period now for Isaac Downs extension. Have you had any early feedback from that process, or you do not get anything early from what is happening?
Glyn. Not yet. We are just less than a week live now in public, and the less we talk about it, the better if you know what I mean.
Yeah.
It goes to just the third week of September. So initial submissions, these are basically submissions, and then there is a process of going through submissions and addressing them together with the regulators, and it is more down the track where you would know if submissions would turn into actual objections, when you actually have a draft EA. So I think it is early days.
Okay, that is fine. Then maybe just on the dividend, obviously you say near-term growth opportunities in regard to capital allocation priorities. Were you aware of the stamp duty payment coming in when you made a decision, or did that come in post your dividend decision? Is this sort of similar to last year? We got no interim, but then you sort of gave us a reasonable final dividend, or is this maybe a reflection you maybe paid a little too much back in February this year? Thanks.
Hi, Glyn. It's Shane here. The stamp duty decision came in very late in the process. But it was only one factor, right, in terms of what the board have to consider in reviewing the dividend decision at this time. I don't think there was any regrets about what was declared at the beginning of this year. I think what we've seen this year, as we've talked about quite extensively, it was higher than expected wet weather earlier in the year, which lends itself to a situation very similar to last year, actually, where we saw production's second half weighted, with the added complexity of the Middle East conflict, creating some uncertainty around fuel and foreign exchange. I think the board is just being prudent in this case. Again, very similar to last year. We'll reapply the policy at year-end.
And by then we'll obviously have the certainty of the production results from second half and, hopefully resolution in the Middle East or at least some more certainty around costs in that area.
Yeah, no worries. Thanks. Marcelo, just on opportunities, obviously you've been quite active in trying to add more to the portfolio from the outside. Is there anything left that looks attractive, or is it now 100% inward-focused? Thanks.
I think there is. I think we are always active, Glyn. So, hope to be able to, let's say, provide some news in the near future. But I think that we are always active in looking what's out there and what can complement the existing portfolio and add value to what we already have. I think the platform is solid now, and there's a lot happening around us. But yeah, I think we have enough to get to be busy organically, internally. Isaac is a project that hopefully with all the approvals coming, we will break ground soon and get started on it. As I said before, Eagle Downs, the first two work packages there will be the completing the access drift and the ventilation shafts to get to pit bottom. That puts us in a much better position than which is just, of course, doing underground development from there.
It's a lot happening, but always active, always looking at what can bring value to the portfolio.
Is it fair to say, Marcelo, that there are two public processes, maybe Gregory, Crinum, and Pembroke, are they the ones that are currently out there in the public domain?
I think there are rumors. Not necessarily official processes. I heard Pembroke, as you know, is a private company, so things tend to get very private. But, yeah, I think it's nothing that we are actively involved at the moment.
Okay. Thanks very much for your time.
All right.
Thank you. The next question comes from Tim Elder with Ord. Please go ahead.
Oh, good morning. Thanks for taking my question, Marcelo, Shane. Look, just on the Eagle Downs project, just wondering if you can give us an indication of the kind of the surface infrastructure that you will be looking to install. You are not adding washing capacity because that is effectively going to be a replacement for Poitrel in the medium to longer term.
Correct. Yeah, I think we looked at many options, Tim, because Eagle Downs is a large deposit, depending on how we approach. If you look at a single longwall operation, which is the, let us say, the base case for the project, Poitrel has enough capacity to support the ramp up. As I explained in the past, depending on when we ramp Eagle Downs up, Poitrel may still be going, which means if you have a bit of overlap, we need to see how that wash plant can handle and how much, especially if you have different types of feed. But yeah, the base case concept for Eagle Downs is, the surface infrastructure on site will be limited to raw material handling, okay? And then, sending run of mine to RMI at Poitrel. With that, we are looking at different options and including haul road and an overland conveyor.
There are trade-offs there between CapEx and OpEx over the years. But with emissions costs with diesel haulage for 20+ years, makes an overland conveyor case looks pretty interesting. Yeah. But as I said, the surface infrastructure on site will be basically limited up to raw material handling. Then we use—
The Poitrel washing and rail load out for processing and then shipping to port, railing to port.
Thank you.
Thank you. The next question comes from Chris Creech with Morgans Financial. Please go ahead.
Morning, Marcelo and team. Just wanted to get a bit of further information on Isaac Downs, Marcelo, and certainly not to ask questions around the approvals, as you have already talked about that one. Could you remind us on the wind down and ramp up timeline Isaac Downs and then obviously the extension? You have mentioned previously that you are heading towards those uneconomic zones of Isaac Downs. Are you thinking of that one finishing in 2028 at some point and then the extension ramping up in 2029? How should we think about that one?
Yeah. That is it, Chris. I think we are now down to a single fleet at Isaac Downs. As you are probably aware, I think I explained this in the release, we have just actually taken over the CMO role and the operational responsibility at Isaac. So we are now running operations, okay, and just dry hiring the gear. So we have a single fleet and a swing digger. We extended actually the fleets up to mid this year just to catch up a bit on weather. Actually, the original plan was already to be parking fleets and down to a single fleet in April. But the plan now going forward, that is the setup. Obviously, with that, with highest preparation, we will see volumes going down, slowly, gradually. That was not surprising. It was always the plan, of course, for us to keep costs at a viable level.
But yeah, I think the plan is stopping at Isaac Downs end of 2028, ramping up expansion from early 2029 if all goes well, right? It all depends on us being able to get approvals as planned. Early days at Isaac Downs expansion will be pretty good because the dragline will be uncovering coal pretty fast at low strip ratios, and we are looking at 4.5 million tonne ROM plus in the early years. So it looks pretty good from the start. But yeah, for Isaac Downs, it is about controlling costs, and try to minimize discontinuity as best as we can.
Yep, no worries at all. That is some good information. Thanks very much. Secondly, you mentioned before autonomous haulage at South Walker Creek. Is that a decision that you guys have made or is that just an option that you are exploring?
It's an option we're exploring. It would be a much more controlled proof of concept, let's put it like that, because we can ring-fence one of a couple of pits in the central area, okay, for example, Z- North, without necessarily putting the dragline path at risk, for example. And with considering that we're going to move the draglines to the Mulgrave area and some of those central pits will become a lot more marginal with trucks and excavators. From a cost standpoint, if that makes them more attractive margin-wise, I think it's not a bad trial, let's put it like that. So it's 30 days, okay. We are looking at that because as part of the overall Chase the Blue strategy, that could be something interesting to look at.
There are other things we are looking at, for example, the Sandy Creek diversion, the potential acceleration of Big Creek, to, let's say, combine with that Chase the Blue, where we could use maybe the opportunity that the plant won't be as stretched to fill that capacity with some competitive ROM. But good news, there are plenty of options at South Walker, okay. So there's a lot going on there.
No, perfect. Thanks very much for that, Marcelo. Appreciate it.
Of course.
Thank you. The next question is a follow-up from Brett McKay with Petra Capital. Please go ahead.
Yeah, thank you. Sorry, just to follow up. Just confirming, Shane, that the stamp duty refund is the full amount. I think it was $ 24 million previously. Not sure what that converted to the FX of the day, but it looks like it's probably the full amount. Is that correct?
Well, it was the amount that was in dispute, right? So we still are paying stamp duty on that deal, but just at a much lower number. So the refund is around that $24 million-$25 million. It—
Aussie. I am sorry, U.S.
Yeah. It needs to go through the processes. The cash hasn't come through the door yet at all. We expect that over the next few months.
Okay, cool. Thanks.
There are no further phone questions at this time. I will now hand the call back to Mr. Matos for closing remarks.
Well, thanks for your questions and your time on today's call. As always, I'd like to thank our employees, our contractors, and the ongoing support of our investors. Look forward to connecting with you all in the coming weeks. Thanks again. Good day.
That does conclude our conference for today. Thank you for participating. You may now disconnect your line.