Stanmore printed US$296m of free cash and a US$80m dividend — and the banks still won't touch it

There is a particular comedy to a business that mints cash while the financial system holds its nose. You have met this person at a wedding: rich, slightly disreputable, somehow paying for the open bar everyone is happily drinking at while loudly disapproving of him.

Reader, meet metallurgical coal.

Start with the facts, because in Field Notes we still believe in those. Stanmore Resources (ASX:SMR) ran its mines hard in 2025 and got paid for it: a record production year and, per the company's own accounts, underlying EBITDA of US$385 million and free cash flow of US$296 million on a balance sheet carrying only modest net debt. It then declared a fully franked final dividend of 8.9 US cents a share — about US$80 million out the door — even as it booked a statutory loss on softer coal prices. A loss on paper, a dividend in your account. That is not a contradiction; that is depreciation doing its job.

The cost curve is the punchline that isn't a joke. Stanmore's FOB cash costs landed around US$88 a tonne in 2025, a few dollars better than 2024, while premium hard coking coal had clawed back to roughly US$218/t by late 2025 off its 2022–23 highs. Subtract one from the other and you understand why the dividend cleared. This is the part the desk keeps repeating like a mantra: in coal, the question is never the price, it's the gap between the price and your cost. Stanmore sits low. The gap pays.

The cash is real, the franking credits are real, and the lenders who won't fund it are real too. Three true things, one awkward room.

Now the bigger, messier cousin. Whitehaven Coal (ASX:WHC) digested BHP ($BHP)'s old BMA assets — Daunia and Blackwater — and is still working off the bill. Its H1 FY26 brought revenue of A$2.5 billion and underlying EBITDA of A$446 million, down hard from the ~A$960m a year earlier when prices were kinder. It kept paying anyway: a 4.0 cps fully franked interim dividend (about A$32m) plus a buyback of up to the same amount. The market's thanks? Shares fell about 5% on the day, unimpressed by the trimmed payout and the second US$500m deferred payment to BMA still looming. Half a billion in cash returns and a sell-off — only in coal.

Here's the structural gag we flagged in our cost-of-capital piece (and won't re-litigate here): the buyers of the metal and the funders of the mine have parted ways. HSBC has barred financing for new met-coal mines; Macquarie committed to exit thermal and met-coal project finance. Campaigners maintain a literal "Met Coal Exit List" tracking which lenders have slammed which door. Steelmakers, meanwhile, keep buying the coal, because there is no blast furnace that runs on press releases.

So the cash piles up, the share registers stay cheap, and the companies do the only rational thing: pay themselves. Stanmore's cumulative dividends have reached 34.2 US cents a share; Whitehaven pairs dividends with buybacks precisely because a low multiple makes its own stock the best asset it can buy. When polite money won't underwrite you, you become your own bank.

In our view — and this is opinion, file it under The Take — the discount isn't a verdict on the assets; it's a verdict on the lender list. We're not predicting a re-rating; the ESG chill is real and durable, and pair that with Queensland's royalty take (see our separate piece) and the margin is taxed and stigmatised at once. But a low-cost tonne into a structurally short coking-coal market is a low-cost tonne. The cash will keep arriving whether or not anyone toasts it at the wedding.