Exxaro Resources (EXX) Trading Update summary

Executive summary

• Achieved 21 months without a work-related fatality, four lost-time injuries, and a 25% year-on-year improvement in LTIFR, with zero high potential incidents reported.

• Operational update covers first half of 2024, focusing on safety, production, sales, and strategic initiatives.

• Board and executive leadership present, including CEO, CFO, COO, and Chief Growth Officer.

• Global economic prospects improved in 2024, with anticipated interest rate cuts and stable world GDP growth at 2.7%.

• Interim results for the six months ending 30 June 2024 will be announced around 15 August 2024.

Trading performance and revenue trends

• Benchmark API4 coal price expected to average $101/t (down from $112/t), and iron ore at $117/dmt (down from $121/dmt) for 1H24.

• Coal production forecast to decrease by 14% and sales by 12%, mainly due to lower offtake and demand from Eskom at Grootegeluk Mine.

• Domestic thermal coal sales expected to decrease by 54%, while export sales are set to increase by 23% through alternative channels.

• Total expected sales remain within 1% of previous guidance.

• Weak coal demand in Asia and Europe early in 2024, with late price recovery due to geopolitical events and logistics disruptions.

Profitability and margins

• Price realizations under pressure as more volume shifts from domestic to export via alternative ports, limiting sales mix optimization.

• Coal business capex for 1H24 expected to be 33% lower, mainly due to reduced sustaining capex at Grootegeluk.

• Cost reduction and efficiency improvement programmes are ongoing to protect margins amid external pressures.

• No material impact on margins expected in the short term, but ongoing optimization efforts are in place.