Exxaro Resources (EXX) Trading Update summary

Safety and operational performance

• Achieved 26 months without a work-related fatality; current lost-time injury frequency rate is 0.06, slightly above the 0.05 target, with ongoing safety initiatives.

• Special focus on safety during the critical year-end period, with reinforced actions at business units.

• Thermal coal production expected to be 6% lower than FY23, mainly due to reduced Eskom demand and lower offtake at Leeuwpan, partially offset by improved Belfast output.

• Metallurgical coal production and sales are forecast to increase, driven by higher domestic demand.

• Rail performance improved during the year, with annualised tempo increasing from 47Mt to 50.5Mt, despite ongoing security and infrastructure challenges.

Financial and capital allocation

• Forecast API4 coal price to average $105/ton and 62% Fe iron ore at $107/ton CFR for the year, both down from FY23.

• Group net cash balance as of end-October was R16 billion, with R12–R15 billion earmarked for acquisitions and growth strategy; R1.6 billion in tax and royalties due by year-end.

• Capital expenditure for the coal business is forecast to be 11% lower than FY23, mainly due to reduced sustaining capital at Grootegeluk.

• Capex reduction aligns with optimal production plans and asset maintenance priorities; Matla Mine 1 Relocation project is underway, with completion expected in 1H26.

• The FerroAlloys disposal process is progressing, with a sale agreement expected in 1Q25.

Market and macroeconomic environment

• Global real GDP is expected to grow by 2.7% in 2024, with moderating inflation and easing monetary policy.

• Seaborne thermal coal prices started weak but strengthened due to geopolitical tensions and supply disruptions; iron ore prices remained under pressure from subdued Chinese demand and high inventories.

• Domestic coal market remains under pressure due to high costs and customers' inability to pass on increases, but demand is resilient.

• European coal prices spiked due to gas concerns, but are expected to normalize; Asian demand varied, with Japan and South Korea showing steady but opportunistic buying patterns.

• Outlook for 1H25 anticipates stable global GDP growth, improved investor sentiment in South Africa, and ongoing logistical and commodity price challenges.