Stanmore Reports Steady Q1 Production, Revises Cost Guidance Amid Fuel Price Volatility

Operational Recovery After Cyclone Koji Disruption

Stanmore Resources (ASX:SMR) overcame significant weather challenges caused by ex-Tropical Cyclone Koji in early January to restore momentum in its Queensland metallurgical coal operations. March was pivotal, contributing nearly half of the quarter's ROM coal mined, with South Walker Creek delivering a record monthly output of 1.1 million tonnes ROM and 0.7 million tonnes saleable coal. This strong finish helped the company meet its quarterly production target of 3.2 million tonnes, broadly in line with the previous year despite the early disruption.

The company’s resilience was underpinned by healthy opening inventories and a proactive operational response, including the commencement of a new mining services contract at South Walker Creek with Golding, which has already shown promising results. Poitrel and Isaac Plains Complex also maintained steady performance, with Poitrel expecting increased trucking capacity to support ramped-up mining in the coming months.

Stanmore’s ability to bounce back echoes its recent track record of operational strength, following record production in 2025 that defied a slump in coal prices and supported a robust cash flow position. This continuity is evident when comparing to the company’s record 2025 coal output, which laid a strong foundation for early 2026.

Financial Position and Dividend Impact

The company closed the quarter with a consolidated cash balance of US$166 million and total liquidity of US$436 million, which includes undrawn credit facilities. Net debt rose to US$79 million, primarily due to an US$80 million dividend payment in early March and capital expenditure of US$12 million. Excluding these outflows, net debt would have improved by nearly US$50 million, reflecting continued positive operating cash flows despite market headwinds.

This liquidity position provides Stanmore with a solid platform to navigate ongoing macroeconomic uncertainties, including fuel price volatility linked to geopolitical tensions. The company’s dividend payment aligns with its consistent shareholder return policy, following the fully franked dividend declared after a challenging 2025 financial year that included a net loss amid coal price pressures.

Revised Cost Guidance Reflects Fuel Price and FX Pressures

While full-year saleable production guidance remains unchanged at 12.8 to 13.4 million tonnes, Stanmore has revised its FOB cash cost guidance upward from US$93–97 per tonne to US$98–103 per tonne. This revision is driven by higher diesel prices and foreign exchange movements stemming from the ongoing conflict in the Middle East, which has particularly impacted fuel markets and shipping routes.

The company is actively managing fuel supply risks, supported by a multi-year diesel supply agreement with a major Australian fuel supplier with refining capacity in Queensland. Despite assurances of continued contracted fuel deliveries, the reference price for refined diesel products in the Asia-Pacific region remains volatile, with futures pricing incorporated into the revised guidance. Without these macroeconomic factors, cost guidance would have remained stable.

This cost adjustment follows a period of stable FOB cash costs in 2025 despite inflationary pressures, as documented in earlier reports where the company managed to maintain efficiency amid challenging market conditions. Stanmore’s ongoing focus on cost control will be critical as it contends with external uncertainties affecting input prices.

Development and Exploration Progress

On the development front, the Isaac Downs Extension project is advancing on schedule, with all baseline studies and groundwater modelling completed. The Environmental Impact Statement is set for submission in the second quarter, marking a significant milestone in the project's approvals pathway. Meanwhile, Eagle Downs continues to progress with surface infrastructure designs and environmental approvals, including ecological surveys during the wet season.

Exploration drilling programs have commenced at Poitrel, with 32 holes drilled by the end of March, and are planned to extend to South Walker Creek and Isaac Downs Extension in the coming months. This sustained exploration activity underlines Stanmore’s commitment to maintaining a pipeline of development opportunities in Queensland’s Bowen Basin, supporting medium-term growth prospects.

These initiatives build on the company’s strategy to create shareholder value through efficient asset operation and targeted development, following a series of successful expansions and record production achievements in recent years.

Coal Market Dynamics and Price Fluctuations

Metallurgical coal prices experienced notable volatility during the quarter. Early gains above US$250 per tonne for premium hard coking coal were driven by supply disruptions from cyclone Koji and outages at other Australian producers. However, prices retreated to around US$220 per tonne before rebounding to US$237 per tonne by quarter-end amid extended delays and concerns over fuel shortages.

The escalating conflict in the Middle East has also influenced freight rates and fuel supply perceptions, though no immediate marine fuel shortages materialised during the quarter. Steel markets remain competitive, with Chinese exports strong but reduced compared to the prior year, and Indian steel demand indicators supporting metallurgical coal imports. Stanmore’s sales mix shifted toward a higher proportion of thermal coal this quarter, which contributed to lower average price realisations of US$152 per tonne compared to previous periods.

These market fluctuations underscore the challenges for producers balancing supply disruptions, geopolitical risks, and demand variability in key steelmaking regions.