Exxaro Resources (EXX) Trading Update summary

Executive summary

• Safety remains a top priority, with 33 consecutive months without work-related fatalities and a lost-time injury frequency rate of 0.06; the 'One Voice' safety strategy was rolled out across the group.

• Coal production and sales volumes are forecast to decline by 6% and 7% respectively, mainly due to reduced Eskom demand.

• Net cash position at end-May stands at ZAR 19.5 billion, excluding ZAR 5.8 billion energy business debt; ZAR 1.6 billion paid in interim tax at end-June.

• A formal Section 189 consultation process has begun at Leeuwpan mine to address ongoing losses, aiming to minimize job losses and ensure viability.

• A major acquisition of manganese assets is underway, with completion expected in early 2026, subject to regulatory approvals.

Trading performance and revenue trends

• Realized API coal benchmark price is forecast to average $91/ton in 1H25, down from $110/ton in 2H24; iron ore prices remain stable at $100/ton.

• Global coal markets face oversupply, with high inventories in key regions and subdued import demand from India and China.

• Domestic market remains stagnant, with price pressure and oversupply; Eskom remains the largest domestic customer.

• Export sales redirected to local markets may reach up to 2 million tons this year, contributing to domestic oversupply.

• Seaborne thermal coal prices remain under pressure due to weak demand and lower natural gas prices.

Profitability and margins

• Coal capital expenditure is expected to decrease by 19% due to lower sustaining capital at key sites.

• Cost-cutting initiatives are ongoing, with more detailed guidance to be provided in August.

• Leeuwpan mine continues to incur losses, prompting the Section 189 process.