Moody's Ratings changes GEAR's outlook to negative from stable; affirms B1 ratings

(Singapore, January 21, 2026)--Moody's Ratings (Moody's) has affirmed Golden Energy and Resources Pte. Ltd.'s (GEAR) B1 corporate family rating (CFR) and the B1 rating on its senior secured notes due in 2027. The outlook has been changed to negative from stable.

"The change in outlook to negative reflects our view that holding company interest coverage will weaken over the next 12 months as dividend inflows fall short of cash needs. GEAR has adequate standalone liquidity over this period, but its buffer has narrowed," says Yu Sheng Tay, a Moody's Ratings Assistant Vice President and Analyst.

"Despite higher coal prices in January, operational disruptions at GEAR's metallurgical coal subsidiaries could limit their ability to fully capitalize on the favorable price environment. This will constrain earnings growth and raise the risk that GEAR will need to provide funding support," adds Tay.

RATINGS RATIONALE

The affirmation of GEAR's B1 CFR reflects our view that, despite the company now being weakly positioned at the B1 level following its 2025 financial performance and recent operational challenges, its credit profile continues to show characteristics consistent with the current rating. These include ownership of metallurgical coal assets with meaningful scale across Queensland and New South Wales, a track record of maintaining operations through the cycle, and exposure to commodity prices that, if sustained at current levels, could support a recovery in subsidiary earnings and dividend flows.

These strengths are balanced against weakening holding company cash flow coverage. Based on our price assumption of $180 per ton, we expect dividend cash flow from GEAR's 59% stake in Stanmore Resources Limited (Stanmore) and 7% stake in PT Golden Energy Mines Tbk (GEMS) to be insufficient to cover holding company interest cost and overheads in 2026.

Holding company interest coverage, measured as dividends received over holding company interest expense, already fell below our 1.5x downgrade threshold in 2025 following a decline in dividends received to about $50 million from more than $100 million in 2024. The decline mainly reflected weaker metallurgical coal prices that reduced Stanmore's earnings. We estimate Stanmore's 2025 EBITDA was about half of 2024 levels.

Force majeure declarations in January 2026 by both Stanmore and GEAR's 51% owned Illawarra Coal Holdings Pty Ltd (IMC) increase uncertainty around the subsidiaries' earnings in 2026. The declarations followed weather-related disruptions at Stanmore and a roof failure incident at IMC's Dendrobium mine. We expect production recovery to extend beyond the first quarter, increasing the risk of missed output targets and limiting GEAR's ability to fully benefit from the higher coal prices recorded in January. We expect Stanmore's capacity to increase dividends is also constrained by rising costs, lease and loan repayment obligations and ongoing capital spending requirements.

At Golden M NSW Pty Ltd (GM3), which holds GEAR's 51% stake in IMC, credit quality remains under pressure from high debt service and capital spending needs. We expect GM3 will need waivers for its debt service coverage covenant later this year because of high interest costs on its $625 million acquisition loan. Failure to obtain waivers could require funding support from GEAR and its partners. We expect GM3 to raise additional debt in 2026 to fund about $100 million of debt service and around $280 million of capital spending.

We project GEAR to generate EBITDA of about $600 million over the next 12 to 18 months, broadly in line with 2025. Leverage, measured by debt to EBITDA, will remain above our 3.0x downgrade threshold.

LIQUIDITY

We expect GEAR to maintain adequate holding company liquidity over the next 12 months, with limited headroom.

Despite lower dividend cash flow in 2025, GEAR raised around $110 million in net proceeds by divesting a portion of its stake in GM3, reducing its interest to 51% from 70%. On a standalone basis, we estimate GEAR had cash of about $30 million-$40 million at the end of 2025.

The cash balance, together with dividends from Stanmore and other investments, will cover holding company overheads of around $20 million and annual bond coupon payments of about $43 million. That said, headroom will likely narrow by end-2026, increasing refinancing risk for the $506 million bond due in 2027.

GEAR has alternative liquidity of about $340 million, represented by its 8% stake in Stanmore and 7% stake in GEMS as of January 2026 that GEAR could divest if needed. The company also holds a 50% stake in the Queensland-based Ravenswood Gold Mine.

FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS

Given the negative outlook, an upgrade is unlikely. We could revise the outlook to stable if operating performance at Stanmore and GM3 improves such that earnings and cash flow increase, and if liquidity at the holding company strengthens through higher dividend inflows, asset divestments, and timely progress in refinancing the 2027 notes.

Specific indicators we would consider to stabilize the outlook include interest coverage at GEAR on a standalone basis above 1.5x and consolidated adjusted debt/EBITDA below 3.0x.

Conversely, we could downgrade the ratings if GEAR's cash flows cannot cover interest expense and overheads on a standalone basis; if the company provides additional funding support to subsidiaries or joint ventures that weakens liquidity; if it adopts aggressive financial policies such as high shareholder returns or maintains a materially lower holding company cash balances than historical levels; if credit quality at Stanmore or GM3 deteriorates significantly; or if there is insufficient progress in refinancing the senior secured notes due 2027.

Specific indicators we would consider for a downgrade include interest coverage at GEAR on a standalone basis below 1.5x or consolidated adjusted debt/EBITDA rising above 3.0x.

The principal methodology used in these ratings was Mining published in April 2025 and available at https://ratings.moodys.com/rmc-documents/440607. Alternatively, please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

The net effect of any adjustments applied to rating factor scores or scorecard outputs under the primary methodology(ies), if any, was not material to the ratings addressed in this announcement.

Headquartered in Singapore, Golden Energy and Resources Pte. Ltd. (GEAR) is a privately-owned energy and resources company with investments in coal and gold in Australia. GEAR's primary investments include a 59% effective stake in Stanmore Resources Limited, a 51% effective stake in Illawarra Metallurgical Coal, and a 50% joint venture stake in gold producer Ravenswood Gold Mine.

REGULATORY DISCLOSURES

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