In a relatively short period, Terracom has gone from headwinds to tailwinds based on three significant factors according to Corporate Connect analyst Richard Close in his updated report on TER:
1. Thermal Coal market. Producers are experiencing almost unprecedented demand for thermal coal resulting in forward curves for benchmark coal prices across all coal benchmarks and is currently in excess of US$300/tonne for benchmark Newcastle 6000 kCal/kg coal.
2. Debt reduction and capital management: TerraCom’s management have made significant inroads in paying down the amount owing on the Euroclear bond facility. The strong thermal coal price environment along with the announcement of the US$60million prepayment agreement indicates that by our analysis the bond facility could be repaid by the end of May 2022 – 7 months ahead of schedule. This paves the way for new capital management initiatives and the reintroduction of dividend payments to shareholders.
3. Continued stable operational performance from both South African and Australian operations: While we have not factored in any production growth in our forecasts, we have a high degree of confidence that current operational levels can be maintained.
To download this report, please visit the TER company page HERE.