The surging price of thermal coal across Asia saw TerraCom slip out a bullish update yesterday on its price expectations for its Blair Athol (BA) mine in Queensland which for years was owned by Rio Tinto.
Due to a combination of factors thermal coal prices in Asia (as per the Newcastle coal index, the main pricing point for the region) has leapt to close to $US180 a tonne, more than double a year ago.
In Thursday’s statement TerraCom said that
“From September 2021, the Company is positioned to capitalise on the exceptional seaborne coal pricing. Thermal coal from BA is sold into premium Asian markets, predominately Japan and Korea, and into the Indian sponge iron market.
“Blair Athol is forecast to generate revenue of AU$178 per tonne in September 2021 which will generate an operating cash margin in excess of AU$100 per tonne.
TerraCom said that both the Newcastle Index and API4 (the South African price index at Richards Bay) “are nearing all-time highs and are at levels which have not been seen since mid-2008, being twelve years ago.
“Based on economic forecasts the indexes are expected to remain solid throughout FY2022 and as a result, the Company expects to generate strong operating cash flows from Blair Athol in FY2022.”
In an earlier statement this month TerraCom said that Blair Athol sold two cargoes last month, in line with forecast.
“With the sustained reduction in its Free on Board operating cost base, from the restructure to owner operator, BA is in a positive position to capitalise on the exceptional seaborne coal pricing which is forecast to remain strong.
The update was newsworthy enough to lift the TerraCom share price more than 4% to 16.7c on a day when the ASX 200 slumped by close to 2%.