How Did AJ Lucas Achieve 29% EBITDA Growth Amid Mining Suspensions?

Robust EBITDA Growth Amid Challenging Conditions

AJ Lucas Group Limited has delivered a noteworthy 29% increase in EBITDA from its Australian operations for the quarter ended 31 December 2025, reaching $6.2 million compared to $4.8 million in the same period last year. This improvement reflects a combination of lower maintenance requirements and fewer wet weather disruptions, despite ongoing suspension of mining activities at two key client sites and subdued demand in Queensland’s steelmaking coal sector.

On a group level, EBITDA rose sharply to $5.9 million for the quarter, with the six-month figure ballooning to $38.5 million. This includes a substantial $25.9 million settlement from UK operations, which helped offset the revenue decline experienced during the period. Revenue for the quarter fell to $31.2 million from $37.5 million a year earlier, highlighting the mixed operational environment.

Debt Reduction and Interest Savings

One of the quarter’s standout developments was the reduction of related party loans by $22.3 million. AJ Lucas made a $12 million payment that unlocked access to discounted interest rates, which remain available until January 2027 to incentivise further repayments. This refinancing move is expected to generate significant cash interest savings, estimated at $12.3 million, improving the company’s liquidity and cost of capital.

The company’s senior syndicated facility, secured against its drilling division assets, remains in place with a maturity extended to May 2027. At quarter-end, $12.9 million was drawn against this $50 million facility, with unused capacity of $10.8 million providing additional financial flexibility.

Operational Outlook and UK Developments

While mining operations remain suspended at two major Australian sites, AJ Lucas continues to navigate a subdued demand environment in steelmaking coal mining. In the UK, the hydraulic fracturing moratorium persists, limiting unconventional gas activities. However, the company is advancing several conventional gas projects onshore, which are not affected by the moratorium, signalling potential future revenue streams.

Cash flow from operating activities was negative $3.8 million for the quarter, but the company holds $5.7 million in cash and $10.8 million in undrawn credit facilities, providing an estimated 4.3 quarters of funding runway. Payments to related parties, including directors and key management personnel, totalled approximately $410,000 for the quarter, consistent with prior disclosures.

Balancing Growth and Financial Discipline

AJ Lucas’s latest quarterly report paints a picture of a company balancing operational headwinds with financial discipline. The boost from the UK settlement and the strategic reduction in related party debt underpin a stronger balance sheet, even as revenue pressures and suspended mining activities temper near-term growth prospects. Investors will be watching closely how the company leverages its conventional gas opportunities in the UK and whether mining demand in Australia recovers.