Bathurst Resources Limited (BRL) Earnings Call Transcript & Summary

Hello, everybody. I'm Richard Tacon, CEO of Bathurst Resources: Let's get the presentation up and we'll keep them open. Welcome to our 2026 FY '26 results and project update. We'll go through some numbers, but look, it's been a pretty good year. And I think the recent news really since the close of the financial year since 30th of June has made it even better. So we'll cover that as we go through -- usual disclaimers. So Bathurst is an operating company. All of our operations at the present time are in New Zealand. So we've got 4 operating mines, Takitimu, which is 100% owned by Bathurst. Stockton -- I haven't shared the screen. Now you can see it. Sorry about that. Let's get back to start. So yes, welcome to the webinar of just going through our results and the project update, our usual disclaimers and we'll start again. Yes, so Bathurst is an operating company. We've got operating mines in New Zealand, and we've got development projects both in New Zealand and in British Columbia and Canada. So 4 operating mines, Takitimu, 100% owned down the deep South, I'll show you a map in a minute. Stockton, and Maramarua and Rotowaro through a joint venture in New Zealand and really the same spread with the project. So Buller Project, well-known to anyone that's followed Bathurst for a long time, coking coal project on the West Coast and South Island, we'll cover that in a bit more detail. Tenas in the Central Northern B.C. and Crown Mountain in the well-known Elk Valley in, again, British Columbia. So where we stood at the end of June, we had a market cap of $120 million share price of $0.50. It's come down a little bit since then, but we had cash in Australian terms of $119 million. So obviously, enterprise value is pretty much 0 and we had an asset backing per share of $1.21. Same board that you've been familiar with over the last few years, a good range of experience and well placed to take the company forward. Again, anyone that sort heard me delivered this over the last few years. We'll be familiar with our thoughts around strategy. And it's very much been around having a set of stable operations that are safe and profitable, which we have got with our existing operations in New Zealand and then taking that strength to go forward. So it should be shared now. We apologize for this. I'm having a moment -- an elderly moment here, I think, right. So hopefully, you are now able to see that screen there. I think just in terms of -- I will go back to this slide, just for anyone that hasn't already seen in the presentation. So share price here at the end of June was $0.50, gives us a market capitalization of $120 million. We've got -- in the consolidated cash of $119 million in the bank, and we've got an asset backing of $1.21. And as I've already said, we've got a good -- a good, consistent base of shareholder and directors that have taken the company forward to this point. Again, we've got a stable operations, safe and profitable. We'll have a look at the results for last year in a minute. But again, we've got another couple of years with the existing operations going further forward, that we can continue that on. And the idea of this is to grow and utilize that operational experience to grow our existing projects, both in terms of brownfields and greenfields with the Buller Project and Tenas and with our joint venture partners with Jameson and the Crown Mountain. Our focus on capital management, definitely at a period of time when we have paid dividends and done share buybacks in the past. But at the moment, it's well all about trying to have sufficient capital to sustain operations safely and profitably and then allow them to continue their path, but more importantly, to bring on these growth projects that would allow us to increase our EBITDA and cash generation. And while it's still center around metallurgical coal. And again, we'll talk about a little bit more as we go through as well. We've got 0 debt on the balance sheet, minus some yellow goods financing and allows us plenty of headroom for future developments. So yes, we utilize hedging on our exports where we lock in about 1/3 of our overall production, and we also lock in the U.S. dollar and NZ dollar FX rate at that point in time as well. And really, what we're doing is looking up to 12 months out, building up a book and trying to lock in some of profits because we've got no debt, we don't have to put a worry about a floor. It's more about trying to when we see a parcel that's attractive. We picked that parcel up. And we've got a close association with our existing suppliers and also maximizing our shipment schedules to reduce our cash flow volatility. So just a little bit more detail on the New Zealand operations. We've got the 2 operations, Maramarua, Rotowaro and the North Island, which are domestic mines and that they supply steelmaking coal mainly into New Zealand's only steel plant, a little bit of coal going into power generation through the Huntly plant. We have got Stockton, which is 100% export, exporting out to South Korea, Japan, India, a little bit into China at times, but predominantly into India, South Korea and Japan, as I said. And then we've got Takitimu down south, which is really in the last couple of years supply and processing coal and to value add to primary production. So that's dairy plants advertise that sort of thing, food manufacturing mainly. Across those, we've got various time lines in terms of life, Rotowaro's got about 2.5 years left to go in its existing guise. There is another growth project. But really, we're struggling for customer for that one. Maramarua, we've just got the 2 extension consented for another 3 years at 180,000 tonnes a year. Stockton, obviously, is the subject of the Buller Project expansions, about 3 years left in the existing holding. Buller Project always expansion, and we've got 2 years left at Takitimu. So we are actually quite heavily into the rehabilitation final sort of staging for Takitimu, while we produce the last of the coal out of there over the next couple of years. So just looking at the financial results. Revenue was pretty much in line with what we achieved in 2025. Obviously, we had a guidance of $35 million to $45 million, very pleasing. We came into the top of the guidance at $45 million EBITDA consolidated for Bathurst in this financial year. Consolidated cash is down a little bit from last year at the same time. We've got $145 million consolidated cash, including short-term deposits that was at the end of June, mainly, because we were spending money on these growth projects. We've got Tenas, we've got Buller. And within the joint venture, we also spent quite a bit of cash doing the final hurdle of overburden for Rotowaro, which will now be paying dividends over the next couple of years. Profit was down about $9 million. So we ended up with a minus $5 million loss for the financial year. Quite a lot of that was because of the growth of these projects, but also we had a write-down of the some of the remaining assets, mainly, waste in advance in Takitimu. With a number of low-level incidents for the -- across the year, which is really disappointing across all the operations. We've had a long-standing field leadership program, which we did a complete review of. And really, the key takeaway was the program itself was working well that was -- it was being really underutilized. So key takeaways from our view as to reward quality rather than quantity of these interactions, 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 there in a single database, which gives us a lot more transparency. The next phase of that, 2 mines have already started rolling out e-learning, which they're utilizing that same database system, to actually allow us greater efficiency of our training hours. And then on the other end of the spectrum, looking at fatal risks. We've had a critical risk program that's been rolling on now for about 6 months. We've got one mine left to go to bring that in. It's a really good program, and it's really helped the operational teams in particular and the risk going is to concentrate on control of fatal risks. 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. There's some unders and overs again. The export pricing looks pretty flat, but we are getting sort of towards the end of the -- our reserve base within Stockton. 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. We will see an increase out of the North Island operations. As I said, we got over that large hump of overburden, and we'll start repaying some of that back. And then the South Island domestic for Takitimu was in that final couple stages. And so we're looking to really, while we've got all the operational team there, we have got only got about 12 people left 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 to the guidance maximum around about $40 million for FY '27. It sort of fits in well 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, obviously, heavily dependent on international coal price for those export pricing, we'll never set that. But we are anticipating another good positive year this year. There is -- again, the forward curve is looking reasonably flat, but at a really good level. I mean, we are seeing pricing out to $260, 12 months out, and we are locking in some of that, as I said before, under our hedging program. Key driver at the moment seems to be actually coming from China again, where India is still going through a significant drop-off in demand through the monsoon season. But we are seeing quite a significant lift in the imports into China, particularly there's been a couple of quite large called significant mine safety incidents that have occurred in China, and there's been a crackdown within the country. So I think longer term, though, everyone is still looking for India to be the major uptake of the international coal on the market with new plants and new coke ovens coming online over the next couple of years. So 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. But give us that sort of experienced operator base, a series where we are owner-operator across all of our operations, and we want to continue that into our expansion projects. So M2, we've already spoken about that. We've got another 3 years through that resource consent. So that's a good sign. The Buller Project and Tenas have both moved on to the next stage, and I'll talk about that as we go through and Crown Mountain is moving on as well into the next phases of it, environmental assessment work. So look at the Buller project, it's really about trying to build on the infrastructure that we already own and are already existing and already producing and getting to the market on. So to the north, we've got the Stockton Complex that contains obviously, all of the CSPP, the coal handling plant, the coal handling facility, the haul road and the aerial to get the coal onto a train. And then obviously, then we've already got existing relationships in terms of rail and port and customer base. So the idea is then we'll join 2 other areas of development, Mount Fred South and the Escarpment Extended on the Denniston Plateau with a dedicated haul road, which will let us allow us -- a series of a couple of years to bring on further tonnes 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. So working, there's about 90 million tonnes of additional production will come out of that and we're aiming for about between 1.1 million and 1.2 million tonnes a year. Relatively low start-up capital, about NZD 100 million and a good positive NPV. And so looking at the production profile, the orange on here is the remaining tonnes within Stockton and obviously supplemented with the Buller Project coming on and then also -- with the Escarpment Extended -- sorry, and then with Mount Fred South as well. 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 quite a small coal field and we need to have the really the 3 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. So again, utilizing existing infrastructure, very much through Stockton, existing rail in an existing path to existing customer base and sort of peaking at around about that 1.2 million tonnes. So where we were up to. The application has been submitted. That's a really key milestone. So that was -- actually, we started uploading it last, well, Friday, the 21st of August. It was completely confirmed by the EPA, which manages the fast-track process on the 24th. That gets in -- the application gets sent out to the regulators. The regulators then get 5 days to comment on whether they feel the application has met the act in their terms. So whether it's complete under the act. 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 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 time lines and one of the key ones is for the expert panel to be convened. So we're looking for that to be the first convening meeting to be sometime in early October, assuming we can get through the completeness test within that time frame. There is likelihood of request for information, the RFIs to come through if they feel there's some additional information required. So we can't really say that's going to be set in concrete for timing and what I'll do is we'll update the market as soon as that occurs. So that then triggers as I said, the actual -- the time line to get to the end of this thing and they are very fixed and very tight time frames, but with some ability to extend those if there's 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 for about the last 2 years since the Fast Track Act came in and a lot longer prior to that with drilling. Obviously, the Buller Project has been in our portfolio since 2010. 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 140 and 160 day assessment period. And again, we will then be out of it in probably a little bit later than this month next year. The good thing about Fast Track, though, when we come out of that, we actually will have our mining permit. We'll have all of the consents, all the resource approvals that we're required to actually go mining. So I suppose the next key steps is updating the PFS to a DFS level. And there are some early works we'll look to get on to in the second half of the FY '27, 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. But really, the critical thing is getting through the Fast Track process. With Tenas, again, we've reached a significant milestone. Obviously, we updated the DFS late last year, October. We're aiming for about 0.75 million tonnes of semi-soft coking coal product. It's close to port in terms of Canadian terms out through to Ridley and we are right on railway line with an owned block of land. Again, about $140 million. This is a total greenfield site, $140 million start-up capital. It's going to have a low cost reduction because it's a low strip ratio mine. We're going to be mining at less than 4:1 strip ratio through most of the blocks. A 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. We've now submitted the environmental certificate that's been accepted for assessment. Now that assessment period is a set 150 days, that's not working days. That's actually set time frame. And then there's a 30-day assessment decision period after that. So there's 180 days to a decision either before or against, and we believe at this point in time, that will definitely be for. So again, we'll be looking to have that decision January, February next year, assuming that time line continues on this. Normally at this phase, not a lot of request for information because we've had extended period of that with each of the regulators requesting information and replies going back. And so we're looking to -- and reasonably confident that we we'll get that certificate issued in a timely manner. So how that fits in, though, with the certificate, we then have got a play for a mining permit. And so there's about a 9-month period of work required to get that mining permit in place and then submitted for approval. We really can't do that in parallel. It's very much a serious because we've got to see what the final conditions that come out of the -- the environmental certificate, then feed very much into the mining permit and the mining permit that deals with all the usual matters, you imagine mining permit would. Geotech stability, health and safety aspects, some environmental aspects, but mainly the actual operation of the mine and how we're going to carry out the condition sets 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 over the Telkwa River, which will allow us access to the site and then going on from there. So just really keeping with the position we're up to in terms of the company as we stand today. 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 0 debt. We're anticipating we're going to earn somewhere between $30 million and $40 million for the next financial year. In terms of New Zealand terms, we've got a $1.48 in net asset backing per share and then to bring that back to our share price, obviously, today, we're $0.45. We've got a cash backing of $0.53 and we've got an asset backing of $1.23. 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. We've got the Buller Project which has now had the application submitted on the Fast Track, metallurgical coals, listings as a New Zealand critical mineral. We've shown that it's a good project in terms of the PFS. We just got to update that now with a more refined DFS, and we're looking to be producing late '28 to '29. The Tenas 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 '29. We hold good cash in reserves. Obviously, the BT development side of the Buller project is fully funded. And then we've got additional opportunities for growth. 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 will double our capacity at Bathurst level into coking coal. There's global recognition, not only in New Zealand, but in the U.S. and in Europe, that metallurgical coal is in short supply, and those pushes are only going to increase, and it's sort of critical importance to steelmaking. Yes, we've got good operations that we can show regulators and our communities that we can operate safely within a good environmental footprint. 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. So again, thanks very much for your attendance. I apologize for the delay in getting the presentation to you upfront. But no, look, I look forward to updating you again once we get through this completeness phase in the next month or so that 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 Tenas and Buller. We are now very much in front of the regulators, and we've started the process. So I'm really looking forward to continue on with that. Thanks very much for your attendance. And any questions send them through on the link that's in the invitation. Thanks a lot. Bye-bye.