Upon its completion, the company's ebitda levels are projected to triple from US$60 million ($78.8 million) in FY2024 to US$168 million in FY2026, as the company will be able to transport larger volumes of coal more efficiently. This will also save the company on current tolling costs and generate additional revenue by charging third-party users, Yon and Chan write. Geo Energy's financial year ends on Dec 31.
FY2025 is also expected to be a better year after the lack of one-off costs in FY2024, removing overburden and surface debris across the company's operating mines to improve coal access and achieve higher production volumes. This coming year, the company also targets to sell 10.5 million to 11.5 million tonnes of coal, 33% to 46% higher y-o-y. In FY2024, the company sold 7.9 million tonnes of coal, down from FY2023's 8.9 million tonnes.
"With emerging countries like China and Indonesia still relying on coal for power generation, coupled with President [Donald] Trump's push for increased coal consumption, we believe Geo Energy will remain a beneficiary of sustained coal demand," Yon and Chan add.
The analysts also see other positives including the company's newly-acquired TRA coal mine, which began to see "meaningful contributions" of 1.1 million tonnes in FY2024. The company acquired an additional 15% stake in TRA at a 12.5% discount in March this year, bringing its total effective interest to 75.1%, the analysts note.
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"This will streamline ownership and enhance control over its TRA mining operations."
They add that they expect the company's production volumes to "ramp up steadily" over the next few years to 25 million tonnes by FY2029, which will contribute "significantly" to its overall bottomline.
In addition, Geo Energy's US$150 million investment into a new 92km hauling road and a jetty will pay off in two folds once the project is completed in the first half of 2026.
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"Firstly, the transportation from Geo Energy's mines to the port will utilise trucks that can carry three to four times their current load and offer faster and safer navigation compared to the existing route," Yon and Chan point out.
"Secondly, Geo Energy has the opportunity to establish a new recurring revenue stream by leasing its newly built infrastructure to other miners in the region. This will clear Geo Energy's bottleneck of an inefficient transportation system, which will feed into [the company's] earnings once infrastructure is completed," they add.
As at 4.55pm, shares in Geo Energy are trading 2 cents higher or 5.71% up at 37 cents.
