Press Releases

Thungela Resources Limited (the “Company” or “Thungela”) confirms that an uncharacteristic environmental incident took place at Khwezela Colliery’s Kromdraai site in eMalahleni, Mpumlanga on Monday, 14 February 2022. A full investigation of the root cause of the incident has started and will be concluded in due course.

The first stage of time critical remedial actions has now been completed. These include containing the overflow, flushing the river system with water from the Bronkhorstspruit Dam to mitigate the effect of mine-impacted water, and clean-up efforts along the stretch of 60km. Screening for possible residual waste will continue.

“We are encouraged by the level of collaboration from the authorities, farming community and members of society who share in our devastation on the impact to ecosystems. We are a responsible mining company and hold ourselves to the highest standards when it comes to our environmental, social and governance obligations. We are fully committed to doing what is right and within our power as citizens of the Mpumalanga community. We will lead the remediation efforts now and, in the future, as well as fully assess the causes and contributing factors that led to this incident,” says July Ndlovu, CEO of Thungela Resources.

Interim findings indicate that a concrete seal at the South Shaft broke which resulted in an uncontrolled release of mine-impacted water. The shaft was sealed in 2019 as part of the water management strategy. Despite a water management plan in place, the volume of water exceeded the maximum capacity for treatment at the dosing site and flowed into the Kromdraaispruit resulting in lowered pH levels of the water.

The collaboration efforts include working with the Department of Water and Sanitation, the Mpumalanga Parks and Tourism Agency, the community, other interested and affected stakeholders. Independent biodiversity, environmental, water and health experts, along with the Company’s experts are providing guidance on the investigation and evaluation of the impact on the environment, the steps to be taken to control the pollution and the remediation steps that need to be implemented to remedy the effects of the pollution.

ENDS

For further information, please contact:
Media
Tarryn Genis
Email: tarryn.genis@thungela.com
Tel: +27 (0) 82 324 4650

Initial actions to mitigate environmental incident at Wilge River, Olifants River and Inlet of Loskop Dam are complete.

Thungela Operations Proprietary Limited (the “Company” or “Thungela”) and the Mpumalanga Tourism and Parks Agency (MTPA) can confirm that the first phase of corrective measures to mitigate the impacts of the environmental incident, that took place at the Wilge River, Olifants River and Loskop Dam, has been successfully completed.

These measures included, containing the overflow, flushing the river system with water from the Bronkhorstspruit and Witbank Dam and collaborative clean-up efforts along the rivers system stretching 60km.

Two aerial surveys were conducted, on Friday, 25 February and Sunday, 27 February respectively. The first by a team of representatives from Thungela and the Department of Water and Sanitation and the second by the MTPA at Loskop Dam. The findings are encouraging.

The MTPA officials in charge, who are aquatic scientists, Dr. Francois Roux and Mr Andre Hoffman undertook a survey on Loskop Dam up to the inflow on Sunday 27 February and found that there were no signs of dead or dying fish following the flush of both Bronkhorstspruit and Witbank Dams. “The post-release clean-up was successful and no further clean-up actions have to be done at this point in time,” said Hoffman.

Additionally, results from independent water analysis indicate that the quality of the water has normalised to the baseline quality that existed prior to the incident. Based on these positive initial outcomes, farmers have been advised that they can commence with irrigation of their crops.

Thungela will continue with water monitoring requirements, screening for possible residual waste and will work with the MTPA should further clean-up operations be required.

The next phase of the remediation is underway with a risk assessment to define all impacts of the incident. A specialist biodiversity company has been appointed to ensure that the detailed rehabilitation plan includes medium- and long-term actions to re-instate the ecological integrity of the river and the re-introduction of fish species.

Speaking about the remediation efforts, Thungela CEO July Ndlovu says; “We are encouraged by the initial clean-up efforts and are fully committed to doing what is right and within our power as citizens of the Mpumalanga community. We continue to work with various biodiversity, environmental, water and health experts to inform the steps to remedy the effects of the pollution.”

Hoffman further added, “We are satisfied with the post clean-up in the reserve. On the reserve the incident was limited to the inlet to the Loskop Dam, and it has not affected the water or fish in the rest of the dam itself. Our team of scientists have seen a healthy presence of aquatic life including schools of vulnerable young fish at several locations in the dam. We invite tourists and members of the public to visit Loskop Dam and enjoy a memorable experience in Mpumalanga.”

ENDS

For further information, please contact:
Media
Tarryn Genis
Email: tarryn.genis@thungela.com
Tel: +27 (0) 82 324 4650

Thungela Delivers Value for Stakeholders With a Strong Set of Full Year 2021 Results.

Safety

Improvement in safety performance with a Total Recordable Case Frequency Rate of 1.35 in 2021 (2020: 1.51). Tragically, a fatality was recorded at Goedehoop in June 2021.

ESG

Employee and Nkulo Community Partnership Trusts to benefit from shared value and receive an inaugural cash dividend of R273 million Thungela contributed R7.1bn to society through wages and related payments (R4.1bn), inclusive procurement (R2.3bn), royalties and mining taxes (R570 million) and social & labour plans and CSI (R118 million).

Financials

Return to profitability with profit for the reporting period of R6.9bn (2020: loss of R362 million) Robust cash generation with net cash of R8.7bn (2020: net debt of R388 million) Maiden dividend declared with R2.5bn returned to shareholders in total at [R18] per share, representing 82% of Thungela’s day one closing market capitalisation.

Thungela Resources Limited (“Thungela” or the “Company”) released its first set of full-year results as a publicly listed company since its debut on the Johannesburg and the London Stock Exchanges on 7 June 2021. This set of exceptional results underscores its successful transition to a profitable, highly cash-generative pure- play thermal coal business.

Thungela delivered adjusted EBITDA of R10bn (2021: R286 million); while net profit was R6.9bn vs. a loss of R362 million in 2021; while headline earning per share was at R66,57 (2021: loss of 531 cents). Favourable coal prices combined with a strong operational focus, resulted in a net cash position of R8.7bn at year end.

July Ndlovu, CEO of Thungela commented:

“Thungela has delivered record full year results, despite the on-going effects of Covid-19 on our operations and rail infrastructure constraints. The tragic loss of life recorded in June 2021 has reinforced our unwavering commitment to achieve our goal of becoming a fatality-free business. This is and will remain a non-negotiable objective. Our operational focus delivered substantial shareholder returns while maintaining disciplined capital allocation, balance sheet flexibility, and sufficient liquidity to withstand market and coal price volatility. Shareholders are set to benefit substantially as 63% of Adjusted operating free cash flow - R2.5bn - will be paid out as a dividend, well above the stated dividend policy of a minimum pay-out ratio of 30% of Adjusted operating free cashflow. This corresponds to a maiden dividend of [R18.00] per share. Furthermore, the Employee and Community Partnership Trusts, the two share ownership schemes that we established to enable employees and our communities to share in the value we create, will receive R273 million collectively.”

Demand for SA coal

Thungela exports most of its coal, and its revenue was positively impacted by the Benchmark thermal coal price which strengthened by 90% to $124 per tonne although the stronger Rand did offset some gains. The demand for high quality South African coal underpinned Thungela’s performance. Developing economies in India, Pakistan, Sri Lanka and Vietnam are on a path of recovery, post COVID19, and are experiencing an increased demand for energy. The discount to benchmark prices has narrowed substantially in 2021 to 16% compared to 26% in 2020, resulting in higher realised coal prices of $104 per tonne in 2021 (2020: $48 per tonne). Thungela reported export equity sales of 15Mt, which reflects a decrease of 16% in 2021. Export sales and production were severely impacted by TFR constraints, and the Company was forced to curtail lower margin production from late in the third quarter as stockpiles reached capacity.

“We remain committed to working with TFR, government and the industry to resolve the issues experienced in 2021 and the start of 2022. We believe the challenges are transient and have planned our operational performance on a gradual, rather than an immediate recovery in rail performance. This is of national concern given that coal exports constitute one of the primary sources of foreign currency generation for South Africa.”

Outlook

We expect a gradual rather than immediate recovery in TFR performance, the 2022 export saleable production is expected to be between 14Mt and 15Mt, before returning to 16Mt per annum from 2023. “While the current geopolitical unrest in Europe is resulting in an unprecedented escalation in energy and commodity prices, including thermal coal prices, the impact on input cost inflation and volatility will remain a risk to global growth. We believe that thermal coal remains a key pillar of the global energy mix and as Thungela we have an important ongoing role as a responsible producer. We recognise and balance society’s needs, environmental expectations, and the vital role we play in the economy and our communities. Our foundations are firmly in place and our journey to value creation has just begun. We will continue our focus on what we can control: achieving our goal of becoming a fatality-free business, realising further operational improvements and cost efficiencies, and seamlessly executing our life extension and production replacement projects,” Ndlovu concluded.

ENDS

For further information, please contact:
Media
Tarryn Genis
tarryn.genis@thungela.com
082 324 4650

Investor Relations
Ryan Africa
Ryan.africa@thungela.com
27116380237

Thungela Resources, Absa and Raizcorp Join Forces to Elevate Small Businesses, Entrepreneurs in Mpumalanga.

Johannesburg, 22 June 2022 – Thungela Resources, Absa and Raizcorp have joined forces to launch a business-development programme focused on providing small enterprises in mining communities in Mpumalanga with hands-on business support, loan funding and technical development.

The joint programme, named Thuthukani, means “uplift" in isiZulu will run across the Thungela operational areas in the municipalities of eMalahleni, Steve Tshwete and Govan Mbeki.

Nkosi Motsoeneng, Head of Corporate Affairs at Thungela says, “Through our partnership with Raizcorp and Absa, we hope to make a positive impact in local communities. The mining sector is a key contributor to South Africa’s fiscus, we have an important role to play in the communities where we operate, and we know that small business development is critical to the long-term growth of South Africa and its people. Thungela is proud to be playing an active role in the creation of a thriving small business sector.”

Powered by leading business incubator, Raizcorp, entrepreneurs who are selected to take part will receive practical entrepreneurial learning, skills and mentorship. In addition, Raizcorp will assist participants to uncover any technical gaps in their businesses and, if necessary, provide them with technical support and development. “Entrepreneurs are our future. The mining context provides a unique environment for us to support large suppliers to effectively scale, as well as those entrepreneurs just entering the mining supply chain for the first time. At the same time, we also develop entrepreneurs who are not currently in the supply chain but have the potential to become future suppliers,” says Allon Raiz, CEO of Raizcorp.

Loan funding will be offered, in partnership with Absa, to those who qualify. Dumisani Mkhonza, Chief Operating Officer for Absa Corporate Funds Management says, “Small businesses face many challenges especially in our post-pandemic economy, most notably a lack of access to finance. Through this initiative, Absa aims to enable economic and social development to small business and entrepreneurs in these areas.”

Eligible applicants must meet the following criteria:

• Only South African citizens over the age of 18 may apply
• Must have a 51% or more black-owned business. Must have been trading for at least six months
• Applicants must be active in the business full time
• Applicants must have access to their own transport
• Must be based in one of the Thungela mining communities in the eMalahleni, Steve Tshwete or Govan Mbeki municipalities
• Must have a cell phone, email address and access to a laptop or computer Interested?

SMS “THRS2022” to 35839 and a member of our team will get in touch with you. Or you can apply for the programme onlinehttps://www.thungela.com/suppliers/business-developmentprogramme.

“The long-term success and sustainability of our communities, employees, shareholders and society as a whole is our top priority. We look forward to this partnership which we hope will add to our efforts to ignite value for a shared future,” concludes Motsoeneng.

ENDS

For further information, please contact:
Tarryn Genis
Head of Communication
Thungela
tarryn.genis@thungela.com | 082 324 4650

Penny du Plessis
Communications Officer
Raizcorp
pennyd@raizcorp.com | 011 566 2000

Thungela creates value for stakeholders with a record set of interim results.

Highlights

• Completed the first half of the year without a loss of life and remains committed to operating a fatality-free business
• A record half-year profit of R9.6bn (30 June 2021: R351 million)
• Adjusted operating free cash flow of R8.9 billion resulting in a robust net cash position of R14.8 billion
• Headline earning per share of R67,23
• Interim ordinary cash dividend of R60 per share declared, returning R8.2bn to shareholders, in excess of the minimum 30% payout ratio*
• SACO Employee and Nkulo Community Partnership Trusts to receive a distribution of R0.5 billion in keeping with commitment to create shared value
• Elders production replacement project approved, enabling us to maximise the value of our existing assets and support livelihoods in the region
• Full year guidance for export saleable production revised to 13.0Mt to 13.6Mt, reflecting the ongoing poor rail performance by Transnet Freight Rail (TFR)

Thungela Resources Limited (“Thungela” or the “Company”) released its half year results for the period ended 30 June 2022. An interim cash dividend of R60 per share was declared resulting in a total of R8.2 billion returned to shareholders, emphasising the company’s ability to deliver attractive returns during periods of strong coal prices.

Against the backdrop of firm demand for affordable and secure energy sources in a volatile operating environment, Thungela achieved adjusted EBITDA of R16.7bn while profit was R9.6bn (H1 2021: R351 million) with headline earning per share at R67,23. Elevated coal prices combined with a strong operational focus resulted in a net cash position of R14.8bn at the end of the period.

July Ndlovu, CEO of Thungela commented: Delivering attractive shareholder returns while maintaining disciplined capital allocation remains a cornerstone of Thungela’s strategy. Our robust cash flow generation and substantial net cash position allow us to declare an interim ordinary dividend of R60 per share. This represents a payout of approximately 92% of adjusted operating free cash flow, once again substantially higher than the minimum payout ratio of 30% as per our stated dividend policy. These results were achieved safely with no loss of life recorded.

The Employee and Nkulo Community Partnership Trusts will receive a distribution of R0.5 billion. These distributions cement our people as our partners and will create a lasting legacy for our communities.”

Demand for affordable energy sources

During the period under review, benchmark coal prices were high due to the energy crisis in Europe and the supply constraints in major coal producing regions. This drove prices to record levels amidst volatility.

Thungela’s ability to take full advantage of the strong price environment in H1 2022 was hindered by TFR’s continued underperformance.

Despite the impact of rail performance on export sales, Thungela achieved record cash generation of R8.9bn adjusted operating free cash flow, up from R1.9bn in the first half of 2021.

“A consistently well-run logistics corridor between Mpumalanga and Richards Bay is crucial not only for coal exporters such as Thungela, but also for the South African economy which generates billions of Rands in foreign currency earnings, tax and royalty revenues through coal exports. We remain committed to working with TFR, government and the industry, but we are also evaluating alternative logitistics so as to migitate the impact of TFR on our operations.”

Delivering on strategy and operating responsibly 

Aligned to Thungela’s strategic pillar to maximise value from existing assets, the Elders project has been approved by the board. The project aims to replace volumes from Goedehoop as the mine comes to the end of its life. In line with the commitment to make environmental social and governance (ESG) considerations a key driver of our capital allocation strategy the social impacts of the project were carefully considered. Elders will support regional livelihoods and benefit from a solar-powered energy solution. The forecast capital spend is R2bn in 2022 money terms.

In addition to the R188 million contribution made to the Green Fund in the first half of 2022, Thungela is committing a further discretionary amount of R200 million to increase the quantum of cash set aside for future environmental obligations.

Driving our ESG aspirations requires an on-going focus on reducing carbon emissions. Thungela has started the journey towards setting intermediate carbon reduction goals to help us chart our path to net-zero by 2050.

Further cementing our commitment to building sustainable livelihoods in the communities where we operate, Thungela launched an enterprise and supplier development programme called Thuthukani focused on providing hands-on entrepreneurial business support, loan funding and technical development to small enterprises in Mpumalanga.

Outlook

Energy security, reliability and affordability concerns in Europe have highlighted the importance of coal in the energy transition. Coal is set to remain a critical input for affordable and reliable power generation, not only in the developing world but also in highly industrialised and developed nations which have recently increased their reliance on coal to meet their energy needs. We are monitoring these trends and their implications for Thungela’s strategy in the short to medium-term, with particular attention given to exploring opportunities for geographic diversification.

Considering the continued uncertainty about TFR’s performance for the remainder of the year and the view that the level of rail performance has not improved sufficiently, the company revised its guidance for export saleable production to a range of 13.0Mt to 13.6Mt for 2022. Previous guidance was between 14Mt to 15Mt.

Capital expenditure will be between R1.7 billion and R2 billion, with the bulk of the spend taking place in the second half of the year in line with historical seasonality.

“Operating a fatality-free business and ensuring exceptional shareholder returns are crucial to earning the trust and support of our stakeholders. We remain committed to delivering on our purpose of responsibly creating value together for a shared future.”
*Thungela’s dividend policy is to target a dividend pay-out of a minimum of 30% of adjusted operating free cash flow.

ENDS

For further information, please contact:
Media
Tarryn Genis
tarryn.genis@thungela.com
+27 82 324 4650 Investor Relations
Ryan Africa
ryan.africa@thungela.com
+27 11 638 0237

Thungela announces that it has signed a three-year wage agreement with the National Union of Mineworkers (“NUM”) which is the recognised labour union across Thungela’s operations, and which represents 86% of unionised employees.

This agreement enables the implementation of a new wage agreement across Thungela’s operations, other than Mafube which runs an independent wage negotiation process. The agreement is effective from 1 June 2022 and covers a period of three-years through to the end of May 2025.

The wage agreement increases salary and salary-related allowances and is expected to increase the total labour cost-to-company, on average by approximately 6% per annum over the three-year period.

Under the agreement, Thungela and the NUM also commit to engaging the board of trustees of the SACO Employee Partnership Plan Trust (“EPP”) to review and amend the trust deed to enable the payment of awards made to the EPP in the same financial year in which they are declared, as opposed to vesting over a period of three years.

July Ndlovu, CEO of Thungela, commented: “We are very pleased to have reached an agreement with our employees and I thank the NUM for their collaboration and constructive engagement during the wage negotiation process. The agreement recognises the important role that our employees have in responsibly creating value together for a shared future.”

ENDS

For further information, please contact:
Tarryn Genis
tarryn.genis@thungela.com
082 324 4650

Thungela has built a multi-purpose community centre which is now open to the community of Clewer. This social and labour plan project will provide a safe space for the community to host activities such as townhall gatherings, events, arts, and culture.

The project was born through a partnership with the Emalahleni Local Municipality to identify infrastructure development projects that address socio-economic challenges faced by the Clewer community. The hall will provide a safe space for various community activities such as community gatherings, events, arts, engagement sessions etc.

“At Thungela we are passionate about initiatives that enhance and improve the lives of communities where we operate. We believe that the addition of community hall in Clewer and our commitment to build a health post in 2023, are a positive step in achieving our vision for shared value” says executive head of corporate affairs for Thungela, Mpumi Sithole.

ENDS

For further information, please contact:
Tarryn Genis
tarryn.genis@thungela.com
082 324 4650

Thungela’s Sisonke Employee Empowerment Scheme (“Sisonke” or the “Scheme”) will pay its first allocation of R387 million to employees in December this year. This first disbursement is based on the dividends declared for the 2021 full year results as well as the 2022 half year results. More than 3500 employees are set to benefit.

Formerly termed the Employee Partnership Plan (EPP), Sisonke will now be referred to as the Employee Empowerment Scheme. Sisonke, is an isiZulu word meaning ‘we are together’. The name was decided through a staff competition and is reflective of the company’s purpose.

“This is a milestone for the business and indeed all eligible Thungela employees. It is testament to Thungela’s vision to responsibly create value together for a shared future,” says Paulos Soviya, chairman of Sisonke’s board of trustees.

“The intention of Sisonke is to ensure that one of the most important stakeholders, Thungela employees meaningfully benefit from the growth and profits of the business. We are proud and humbled that this is a reality. Thungela employees and their families will benefit from the commitment and hard work that has contributed to our success and we thank them for their contribution,” said executive head of human resources, Lesego Mataboge.

“The successful launch of Sisonke Employee Empowerment Scheme is because of fruitful engagement between the employer, National Union of Mineworkers (NUM) and the board of trustees. We are confident that Sisonke will create real benefits for employees,” said employee representative Bongani Mahungela.

The Scheme has been set up as a trust, which is a legal entity. The trust owns 5% of Thungela’s South African Coal Operations Pty (SACO) and is entitled to receive 5% of the dividends that may be paid out by SACO. The board of trustees includes 50% employee and 50% employer representation. The benefits of the trust are shared, equally among all eligible employees on the beneficiary register after taxes and other expenses have been paid to administer the trust.

ENDS

For further information, please contact:
Wayne Mokhethi
wayne.mokhethi@thungela.com
073 894 7689

Tarryn Genis
tarryn.genis@thungela.com
082 324 4650