Earnings call transcript: Bathurst Resources Q1 2025 highlights stable performance

Bathurst Resources (BTU.NZ) reported its Q1 2025 earnings, highlighting stable financial performance amidst challenging market conditions. The company’s financials reflected consistency in operations, with a focus on strategic projects and maintaining a strong cash position. Despite weakened export coal pricing, Bathurst Resources continues to leverage its diversified operations across New Zealand and Canada.

Key Takeaways

• Bathurst Resources anticipates a full-year EBITDA of AUD 45 million.
• The company maintains a strong cash position with AUD 155 million consolidated.
• Export coal pricing challenges impacted revenue, yet wages remained stable.
• Strategic projects like the Buller and Tenas are progressing, with significant future potential.

Company Performance

Bathurst Resources demonstrated resilience in Q1 2025, maintaining quarterly performance comparable to the previous year. The company operates four mines in New Zealand, with ongoing expansion efforts at the Maramarua mine. Despite a downturn in export coal prices, Bathurst’s diversified operations and strategic project developments, such as the Buller and Tenas projects, position the company for future growth.

Financial Highlights

• Anticipated full-year EBITDA: AUD 45 million
• Cash in bank: AUD 155 million (consolidated)
• Wages consistent at AUD 90 million
• Export coal pricing weakened, impacting revenue

Outlook & Guidance

Bathurst Resources is focusing on strategic projects to drive future growth. The Buller Project is targeting a Fast Track application by Q3 FY2026, while the Tenas Project expects an environmental permit by 2027. The company projects significant net present values for both projects, with AUD 223 million for Buller and AUD 270 million for Tenas.

Executive Commentary

CEO Richard Tacon emphasized the company’s strong foundation: "We’ve built a successful business in New Zealand over the last eight years." He also expressed optimism about shareholder returns, stating, "We are looking forward to generating capital returns for our long-suffering shareholders."

Risks and Challenges

• Export coal pricing volatility could affect revenue.
• Project development risks, including regulatory approvals for Buller and Tenas.
• Potential operational disruptions in expanding mines.
• Macroeconomic pressures impacting global coal demand.

Bathurst Resources remains focused on navigating market challenges while advancing its strategic projects, aiming for sustained growth and shareholder value.

Full transcript - Bathurst Resources (New Zealand) Ltd (BRL) Q1 2026:

Richard Tacon, CEO, Bathurst Resources: Hi, I’m Richard Tacon, CEO of Bathurst Resources. Welcome to the Quarter One FY26 result webcast. We’ll move on through this. Bathurst is an operating company. All its operations are based in New Zealand, but we’ve also got two projects in British Columbia and Canada. We’ve got four operating mines: Takitimu, Stockton, Rotowaro, and Maramarua. Again, two in the North Island. I’ll show you a map in a minute. One on the West Coast and one on the Deep South. The Buller project, which is right next door to Stockton, we’ll talk about more as we go through. Tenas is in northern British Columbia, and Crown Mountain is a joint venture with Jameson, which is in eastern British Columbia. I suppose the key thing on this page really is that we’ve got a very low enterprise value. We’ve got cash in the bank.

We’ve got significant earnings generation going on, and particularly in the future. Really just moving on to strategy. We’ve got existing operations that are making money. The key there is to maintain those operations in a safe and efficient way, not doing any damage to the environment, and also making money. Out of those, then build on the organic growth opportunities within those existing projects or right next door to them, utilizing existing infrastructure. More importantly, looking at some new areas, and in our case, British Columbia, to then build and add to our coking coal capability in terms of export tonnage. That was certainly the intention with the Crown Mountain project, which we got into in 2018 as a place to learn with our partners, Jameson, and then onto the 100% owned Tenas project.

Ultimately, we’re looking to generate capital returns that we can then flow back to our long-suffering shareholders. We’ve built a successful business in New Zealand over the last eight years or so, and we look forward to actually taking you through that journey a bit further with the Buller project in New Zealand and with the Tenas project. New Zealand, we’ve got two mines in the North Island, Maramarua, Rotowaro, principally supplying steel production, but we also recently announced in the last quarter that we have got a tonnage going into the thermal power station at Huntly as well over the next two years. Stockton is 100% export. It’s a high-quality coking coal going into the international market, principally supplying customers in India, South Korea, Japan, and a little bit into China. We’ve got the Buller project next door to that, which we’ll talk about more as we go through.

We’ve got offices in Wellington, regional office in Christchurch, and then we’ve got the Takitimu mine down south, which supplies processed heat coal into the value-added New Zealand prime production. All the mines have got relatively short lives, but they’ve also all got expansion opportunities. Maramarua, at the present time, we’re going through a further consent for what we call the M2 block, which will give us another couple or three years of production. Stockton’s got about three years left where we are now. Again, we’ve got a growth project that’ll take that further forward as part of the overall Buller project, 15-plus years. Then Takitimu, as we previously announced, we’re working our way through the last reserves within the existing holding. We’re probably a little bit more coal now than what we thought we had. We will have production going further forward into FY2027 than what we originally anticipated.

A reasonable quarter, pretty much in line with what we did last year. Probably the major thing was we didn’t have the impact on our export business with the Taihape tunnel being up for nearly six months, which obviously heavily affected the quarter one FY2025. We have also seen quite a weakening in the export coal pricing. Increased tonnage for this quarter out of the export, but also a lower cost or lower price received per ton. Cash flow has grown. Profits are slightly higher again because we haven’t got the impact of the Taihape tunnel. Just looking at each of the segments individually, as I’ve said, we’ve got a little bit more overburden coming out of Stockton, which has impacted some of the costs, lowered a little bit the EBITDA.

We haven’t got the impact of the tunnel, so we’ve increased the sales back up to where they were the year before, but we have got a lower sale price, so our revenue has been affected. Rotowaro, we are still in the major cutback for the Waipuna West extension pit. That’s going to drop off early next year, and then we’ll be into a sort of a more steady state overburden in line with then the remainder of the coal coming out into sales into steel production and also into the power station. All right. Maramarua, again, we’re in cutback for M1. That’s moving along quite nicely. We’ve had an increase there with the amount of overburden, which obviously has affected some of the costs as well.

We are looking forward to getting this M2 block that’ll then consolidate the remaining reserve and let us move on for the next few years. Takitimu. Overburden removal is lower because we’re on a lower sales base now. We are in the sort of the semi-rehab phase with Takitimu. We’re doing sort of rehab at the same time that we’re mining the last of the coal out of there and into sales. As I said, we are looking at an increase in the overall reserve. We’ve had positive reconciliations against the geologic model in the remaining area, and we are looking to actually have some sales going into FY2027 as long as concluding the rehab during that period of time. In terms of our sort of overall stats, if you like, in terms of the New Zealand economy, we have about 700 employees.

We have probably got another couple of hundred full-time contractors on top of that, with some mining going on with contractors at Rotowaro and at Stockton. Wages are similar levels as what they were back in 2025, I suppose, around just under AUD 90 million. The taxes, royalties, and government fees are a little bit lower this year because of, obviously, a lower profit year last year affected by things like the tunnel. We are expecting those, as the coal price increases again, those returns back to the government will also increase. The amount we are paying to suppliers is reasonably consistent as well as it has been over the last couple of years. Our commitment to safety is unerring. We are seeing a nice consistent drop-off in our negative performance indicators.

This is on the back of a lot of hard work by our employees, by our supervisors, and by management. We have instituted things like the learning management system, where we get a lot better handle on our training requirements and also training compliance, as well as risk management skills across the whole company. We are anticipating that we are going to be somewhere around AUD 45 million EBITDA for the full year, full financial year ending June 2026, with some ups and downs around for the export, North Island, including corporate and South Island, including corporate. We have had an increase, obviously, in costs at Telco or Tenas as we move forward into the environmental application phase, and we are looking forward to moving that project forward as we speak.

We have a good consistent export business that obviously is highly impacted by the export coking coal price, but our underpinning and sort of supporting for the whole business is the domestic business. Obviously, we are seeing a little bit lower returns there over the last four or five years, but we will see a return to particularly the North Island business to consistent EBITDA numbers that we had when we first took over the business as we get some of these major cutbacks completed and we move into the final stages of the development. Coking coal price has been reasonably flat, like it has been probably low compared to what it has been over the last few years. We got as low as around the $170s, but we are seeing a little bit of improvement.

Pretty much what we are seeing that was in the forward curve is what was anticipated about six months ago, a slow increase back up to around $200 US a ton. As you know from our past presentations, our export business gets about 80% of that benchmark across the full gambit of product range. This is probably the exciting part of the news coming out of particularly our New Zealand business, but also Tenas. What we’ve just released is the PFS for the Buller project. We are looking at, sort of, well, if you look at the picture on the right-hand side, obviously the Stockton mine with infrastructure, we’re looking to construct a haul road to join those together. Mountford South is an area that’s jointly owned between the joint venture BT Mining and Bathurst, and then the 100% owned Denniston Excartment Extension on the Denniston Plateau.

The intention is that as we stage this, we’ll start some development in the Buller project and the Denniston, and also then start the road construction from both ends, from Cypress South heading south and from the Denniston Plateau heading north. As soon as possible, get access up into Mountford South and commence some of the early works for there. We’re a little bit further in front on the Denniston side of it. This will also allow for the remaining coal within Stockton to be blended and bring it to the market. Just some of the sort of stats around that overall project. This is not just the Bathurst part. This is the Bathurst BT with the three major components: Mountford South, Excartment Extended, and Stockton. We’re looking at a total spend of around AUD 105 million.

Cash costs are going to be reasonably high because of the high strip ratio, particularly on the Denniston Plateau. We’ve got a good healthy NPV of around AUD 223 million. That’s based around a coking coal price that starts off around where we are now and then ends up on a pretty flat curve out in the 10-year plus timeframe of around $300, which is probably the lower end of the consensus pricing that we’ve been analyzing as part of the PFS. The next stage here is to complete the application for Fast Track. It’s taken a little bit more time than what we anticipated because we really, really want to get this into a form where it can be as easily as possible consented by a panel.

We’re getting a lot of learnings out of some of the other projects that are going through Fast Track, and we’re putting those learnings into our own project as we speak. The intention here is to build a business that’s going to maintain about 1.2 million tons of export into that international market, as described before, but changing really the mix of where those products are coming from. Stockton, it’s probably got three years where it’s going to be around the existing sort of tonnages coming out of Stockton. Some of that tonnage will then be dropping off and being replaced by the Denniston part of the Buller project, and then underpinned by the Mountford South as we move forward into the development cycle. Again, maintaining around that 1.2 million tons out past 2041.

Anticipating putting in an application early in 2026, quarter three of this financial year, and then being out of that process by the end of 2026. As I said, we’ve just released the PFS results in an announcement on Friday, and we’re now working on the DFS, or we continue to work on the DFS. Our goal here is to get really some pre-work done once we actually get a good nod on the access into the Denniston Plateau in particular, and as we move further forward into the end of the Fast Track process. With Tenas, again, we’ve just released the update to the DFS. The last time the DFS was updated was pre-COVID, 2019. Obviously, we’ve had a significant movement in costs during that period of time, both OPEX and CAPEX, but we’ve also had a significant uplift in the longer-term coke and coal pricing.

Taking the learnings we’ve had over the last couple of years and then putting those into that upgrade has led to some quite significant updates to the project. Anyone that’s not familiar with it, this project is really directly north of Vancouver. It’s about 300 km from Prince Rupert, so it makes it really the closest coal to a coal port in the whole of British Columbia. We’ve been into it since 2022. Some of the sort of key aspects of it: startup capital of around $140 million, operating costs in the lower range at around $81. We’ve looked at an increased price received. It’ll be up around $175 over the life of the project. We’ve got a positive NPV of $270 million. Like all good projects in mining, the key thing here is getting these environmental assessments and the mining permit, and that allows us then to get going.

All of the IR submissions have been completed now. We’re working again to finalize the environmental assessments and looking to get those submitted very soon. That will then allow the effects assessment process to be completed by the EAO. We’re working very closely with First Nations groups in British Columbia, particularly the principal landowners of the area that we’re going to be mining in. We look forward to taking that project forward. The next big key milestone will be the submission for a mining permit, and that permit approval sometime during calendar year 2027. Just looking at where we are, I mean, we’ve got cash in the bank. We’ve got $155 million at consolidated level. I suppose, just as importantly, to everyone that understands some of the complexities of the joint venture, we’ve got $34 million sitting in the Bathurst accounts.

We’re well and truly funded for the development work at this stage in the Buller project and also in the Tenas project. We’ve got no debt on the balance sheet apart from some small lease finance associated with Takitimu. As we’ve shown, we’ve got good earnings capacity, 35-45 million over this next financial year. We’ve got a good asset backing, but our share price is sitting even lower level today. This was at the end of September. This was at AUD 0.76, so I think it was AUD 0.65 this morning. We’ve got a cash backing of AUD 0.59. We’re good value. Just to wrap up, profitable operations both within the joint venture and 100% owned Takitimu. We’ve got that cash in the bank. We’ve got a Fast Track process that is available to us, and that application is fastly getting completed.

We’ll be out of that by the end of next year. The Pre-Feasibility Study has been completed for the Buller project. DFS is now moving on quickly as well. We have got the New Zealand Fast Track we can utilize, but also the New Zealand government has recognized metallurgical coal in the New Zealand Critical Minerals List. This counts a lot, particularly when we get into processes with some of the regulators. It makes it a lot easier for them to be looking at this project favorably if it is backed by the government in that way. In terms of Tenas, we’ve got a positive DFS and confirmation of reserves that were completed at the end of October. Again, we look forward to getting the environmental certificate process finalized for the Tenas project. Thanks very much.

That was a very quick, I know, update to our Bathurst business, but we look forward to really updating you as we move forward, particularly with the application for the Fast Track. Thanks very much.

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