Stanmore Resources Boosts Production 27% and Cuts Debt Costs with Refinancing

Operational Recovery Drives Production Growth

Stanmore Resources Limited (ASX:SMR) delivered a sharp operational rebound in the June quarter, with run-of-mine (ROM) coal production surging 27% quarter-on-quarter to 5.1 million tonnes. This recovery follows a challenging start to 2026, where wet weather significantly disrupted mining activities. Saleable coal production also increased modestly by 3% to 3.3 million tonnes, keeping year-to-date output on track with the company's full-year guidance of around 13 million tonnes.

The company deliberately accelerated stripping and pit preparation at South Walker Creek, its flagship mine, to set up a stronger second half. Despite routine annual shutdowns of processing plants and equipment, South Walker Creek maintained steady production, while Poitrel and Isaac Plains Complex mines also showed signs of normalising after earlier weather impacts. These operational improvements underpin Stanmore's confidence in meeting its 2026 targets.

Debt Refinancing Enhances Financial Flexibility

In a significant financial move, Stanmore refinanced its senior corporate debt facilities shortly after quarter-end. The term loan was upsized from US$210 million to US$250 million and restructured to a bullet repayment profile, eliminating US$70 million per annum in scheduled principal repayments until maturity in June 2029. Additionally, the undrawn revolving credit facility of US$200 million was extended by 18 months to March 2029.

This refinancing lowered the interest margin by 1.00% to 3.50% and reduced commitment fees, reflecting the company's improved credit profile. The process was oversubscribed, indicating strong lender confidence in Stanmore's asset base and management. With net debt at US$72 million and total liquidity of US$408 million as of 30 June 2026, the company is well-positioned to optimise capital allocation amid operational stability and upcoming development projects.

Advances in Development and Exploration Projects

Stanmore continues to progress its development pipeline, submitting the Environmental Impact Statement (EIS) for the Isaac Downs Extension project in June, a key regulatory milestone. Infrastructure planning and design for Isaac Downs are ongoing, while Eagle Downs development studies are accelerating with a targeted completion in early 2027. Surface infrastructure layouts are finalised, and underground studies have resumed.

Exploration activities remain active, with a 3D seismic program at Isaac Downs Extension more than halfway complete and preparations underway for the Lancewood drilling campaign. Updated fault modelling has delivered encouraging results, enabling mine planning redesigns to recommence.

Market Conditions Support PCI Coal Pricing

Market dynamics during the quarter favoured Stanmore's product mix, which is predominantly pulverised coal injection (PCI) coal. Australian PCI pricing improved relative to premium hard coking coal, supported by seaborne supply tightness and steelmakers' focus on cost efficiency. Supply disruptions in China, including a major mine accident and subsequent closures, tightened domestic metallurgical coal availability, further underpinning demand for seaborne coal.

While steel market conditions remain competitive globally, with elevated Chinese steel exports and European blast furnace restarts, infrastructure investment in India remains robust despite seasonal demand moderation. These factors collectively sustain a supportive pricing environment for Stanmore's metallurgical coal products.

Safety and Operational Discipline Maintained

Stanmore reported no serious accidents during the quarter, maintaining a rolling 12-month Serious Accident Frequency Rate of 0.51, well below the industry average. The company completed integration of Critical Control Management into its Principal Hazard Management Plans, aligning with recent Queensland legislative changes, underscoring its commitment to safety and compliance.