TerraCom expects FY22 earnings to be close to its market cap; 12% dividend up for grabs

TerraCom (ASX: TER) is another coal miner printing cash this year thanks to an ongoing coal shortage and record prices.

The South Africa and Australia-based coal miner said it was on track to deliver 640,000 tonnes from its Blair Athol Project in Queensland for the June quarter.

TerraCom reaffirmed that Blair Athol will achieve around 2.3m tonnes in coal sales for FY22.

Source: Terracom

Based on earnings attributable to TerraCom, it expects to generate $423m in EBITDA in FY22.

This is massive relative to the company's market cap of around $440m.

Massive dividend on the horizon

TerraCom has been aggressively paying off its debts.

The total redemption value of its Euroclear Bond was US$167.1m as at 30 June 2020. The company managed to fully repay the bond on 25 May.

With strong earnings continuing to flow through, TerraCom said it expects to recommence dividends to shareholders over the next few months.

Executive Chairman Craig Ransley said the first dividend to be returned to shareholders is expected to be paid during September 2022.

"The dividend is forecast to be an initial unfranked dividend of 10 cents per share," said Ransley. This represents a yield of 12% based off today's open of 84 cents.

TerraCom share price chart