Yancoal Sets New Quarterly Production Record at 10.8 Million Tonnes as Kestrel Mine Acquisition Nears Completion

Record Quarterly Production Driven by Transition from Overburden Removal to Active Mining

Yancoal reported a 20% jump in attributable saleable coal production to 10.8 million tonnes in the June 2026 quarter, setting a new quarterly record. This increase followed the expected operational shift from overburden removal to active coal mining, as earlier 2026 guidance indicated the first quarter would have the lowest output due to prioritising waste stripping at open-cut sites. The quarter-on-quarter growth highlights the benefits of front-loaded waste removal completed in earlier quarters across most open-cut mines.

On a 100% basis, Yancoal produced 17.5 million tonnes of run-of-mine coal and 13.8 million tonnes of saleable coal during the quarter. The first half of 2026 saw attributable saleable coal production of 19.8 million tonnes, a 5% increase year-over-year. Management noted this positions the company to exceed last year’s record annual output and deliver results in the upper half of its 2026 full-year guidance of 36.5–40.5 million tonnes.

Average Realised Coal Price of A$160 per Tonne Reflects Strong International Market

Yancoal’s average realised coal price in the June 2026 quarter was A$160 per tonne, up 9% from A$146 per tonne in the prior quarter and 13% higher than A$142 per tonne in June 2025. This included an 11% increase in thermal coal prices to A$149 per tonne and a 3% rise in metallurgical coal prices to A$219 per tonne compared to the March quarter.

The price gains were driven by broad strength in international seaborne thermal coal markets, where major indices rose 14–19% during the quarter despite late-quarter declines. Robust demand across export markets and supply constraints among competing suppliers supported pricing. Management expects these index trends to influence future quarterly results. Yancoal sells both thermal and metallurgical coal products indexed to international benchmarks in seaborne markets.

Strong Cash Position of A$2.01 Billion Supports Growth and Capital Expenditure

As of 30 June 2026, Yancoal held a substantial cash balance of A$2.01 billion, providing significant financial flexibility to support its growth strategy and capital investments. This strong cash position reflects operational performance and profitability amid current commodity prices. The company’s scale, cost structure, financial strength, and debt market access position it competitively in global seaborne coal markets.

This financial strength enables Yancoal to advance strategic acquisitions and capital projects. Management highlighted capacity to reward shareholders in future years as the company integrates the Kestrel Coal Mine acquisition. The balance sheet also buffers against cost pressures such as elevated diesel prices, although the outlook for operating costs has moderated since early 2026.

Kestrel Coal Mine Acquisition Advances with FIRB Approval, Completion Targeted by September 2026

Yancoal’s acquisition of an 80% stake in the Kestrel Coal Mine, announced in April 2026, has cleared key conditions including Foreign Investment Review Board approval. Completion is targeted for the end of the September 2026 quarter, with potential for earlier closing pending remaining conditions. Kestrel is a large, long-life hard-coking metallurgical coal asset with strong margins.

Management described the acquisition as a significant growth milestone that will enhance Yancoal’s product mix toward higher-margin metallurgical coal and expand production capacity. The 2026 guidance excludes any contribution from Kestrel due to anticipated late-quarter completion.

2026 Full-Year Production Guidance Maintained, Expectation to Exceed Midpoint

Yancoal reaffirmed its 2026 attributable saleable coal production guidance of 36.5–40.5 million tonnes. Based on first-half output of 19.8 million tonnes and current momentum, the company expects to deliver results in the upper half of this range. This assumes continued strong operational performance and execution across all mines. The guidance excludes Kestrel contributions pending acquisition completion.

Cash operating costs are forecast at A$90–98 per tonne, with higher diesel prices pushing costs toward the upper half of this range. However, management no longer expects costs to reach the top end. Capital expenditure is projected at A$750–900 million on an attributable basis, likely at the lower end due to some spending deferrals into 2027. This reflects flexibility in investment timing and asset development.

Safety Performance Declines, Prompting Renewed Focus on Interventions

Yancoal’s 12-month rolling Total Recordable Injury Frequency Rate (TRIFR) increased to 6.64 at June 2026 from 5.77 in March 2026, though remaining below the industry weighted average of 9.23. This deterioration has led management to intensify safety intervention efforts. The company reaffirmed safety as a top priority and plans enhanced protocols and worker engagement to address the rise.

While specific injury details and intervention plans were not disclosed, management’s commitment suggests additional controls, training, and supervision across its diverse open-cut and underground operations, each with unique safety challenges.

Ashton Underground Mine Scheduled to Close Early 2028 Amid Technical and Economic Challenges

In late June 2026, Yancoal announced it will cease operations at its 100%-owned Ashton underground mine from early 2028 due to technical, geotechnical, and economic difficulties. Ashton produced 0.8 million tonnes of ROM coal and 0.4 million tonnes of saleable metallurgical coal in the June quarter, contributing modestly to overall output.

Management emphasized workforce support during the transition, including redeployment and career assistance. The approximately 18-month lead time allows for workforce planning. The closure does not impact 2026 guidance and represents a minor portfolio adjustment, highlighting challenges faced by older underground assets.

Diesel Price Pressures Ease but Continue to Impact Operating Costs in 2026

Diesel price pressures have moderated compared to early 2026, though some uncertainty remains. Yancoal continues to face elevated diesel costs, a significant input for open-cut mining where fuel use correlates with mining activity. Operations and Procurement teams maintain close coordination with suppliers, securing rolling two-month fuel commitments and contingency plans for supply disruptions.

Cash operating cost guidance of A$90–98 per tonne factors in elevated diesel prices, currently expected toward the upper half of this range. Management no longer anticipates costs reaching the top end, indicating some price stabilization or modest declines during mid-2026, easing cost pressures relative to earlier concerns.

Mine-Level Production Shows Strong Output from Moolarben and Mount Thorley Warkworth

Yancoal’s portfolio delivered mixed mine-level results in the June quarter. Moolarben, the largest asset with 98.75% economic interest (up from 95% before October 2025), produced 5.4 million tonnes of attributable saleable thermal coal, a 23% increase quarter-on-quarter and 9% above last year. Both open-cut and underground operations performed at or above targets, supporting higher coal handling plant feed rates. Mount Thorley Warkworth (83.6% interest) generated 3.1 million tonnes of attributable saleable metallurgical and thermal coal, up 34% quarter-on-quarter and 12% year-over-year.

Hunter Valley Operations (51% interest) produced 3.7 million tonnes, stable quarter-on-quarter and 17% higher year-over-year. Yarrabee (100% interest) delivered 0.7 million tonnes, a 75% increase from the prior quarter, while the equity-accounted Middlemount operation contributed 0.6 million tonnes. Ashton produced 0.4 million tonnes of metallurgical coal, down 20% from the prior quarter but well above last year’s 0.2 million tonnes. Detailed commentary on other mines was not provided.

Sales Mix Shifts Toward Thermal Coal in First Half of 2026

Yancoal’s attributable coal sales in the June quarter totaled 11.6 million tonnes, including 9.8 million tonnes of thermal coal and 1.8 million tonnes of metallurgical coal. This represented a 41% increase in sales volumes for both coal types compared to the prior quarter, with growth rates varying by coal type. First-half 2026 sales reached 19.8 million tonnes (16.8 million thermal and 3.1 million metallurgical), up from 16.6 million tonnes in the first half of 2025, reflecting production growth and normalization after prior market or supply disruptions.

Thermal coal realised A$149 per tonne in the June quarter versus A$134 per tonne previously, averaging A$143 per tonne in the first half of 2026 compared to A$138 per tonne in the first half of 2025. Metallurgical coal prices were A$219 per tonne in the June quarter, up from A$213 per tonne, averaging A$216 per tonne for the first half versus A$207 per tonne last year. The company’s 2026 guidance anticipates continued strong sales volumes but does not provide product-type or customer and geographic sales breakdowns.