Southern Alliance Mining 1H FY2026 Results: Revenue Surges 95%, No Dividend Declared for Interim Period

Southern Alliance Mining Ltd: 1H FY2026 Financial Results Analysis

Southern Alliance Mining Ltd (“SAM” or “the Group”) has released its unaudited condensed interim financial statements for the six months ended 31 January 2026 (1H FY2026). The Group, historically a high-grade iron ore producer, has significantly diversified through its recent 40% acquisition of MCRE Resources Sdn Bhd, marking a strategic entry into the rare earth elements (REEs) sector. Below, we break down key financial metrics, trends, and highlight notable events impacting the company’s performance and outlook.

Key Financial Metrics & Performance Summary

Metric	1H FY2026 (6M Ended 31 Jan 2026)	2H FY2025 (6M Ended 31 Jul 2025)	1H FY2025 (6M Ended 31 Jan 2025)	YoY Change	QoQ Change
Revenue (RM’000)	137,301	N/A	70,278	+95.4%	N/A
Cost of Sales (RM’000)	131,859	N/A	77,347	+70.5%	N/A
Gross Profit/(Loss) (RM’000)	5,442	N/A	(7,069)	Turnaround	N/A
Loss Before Tax (RM’000)	(2,007)	N/A	(11,464)	+82.5% improvement	N/A
Net Loss (RM’000)	(4,220)	N/A	(10,297)	+59.0% improvement	N/A
EPS (Malaysian cents)	(0.77)	N/A	(2.10)	+63.3% improvement	N/A
Dividend per Share	None	None	None	No change	No change
Net Asset Value/Share (Malaysian cents)	82.39	63.38	63.38	+30.0%	+30.0%

Segment Highlights and Revenue Drivers

Revenue Surge: Total revenue nearly doubled, mainly due to the first-time consolidation of rare earth oxide (REO) sales from MCRE (RM63.1m) and bauxite sales (RM13.4m), offsetting a 13.4% decline in iron ore sales.
Gross Margin Recovery: The Group swung from a gross loss in 1H FY2025 to a gross profit of RM5.4m, with the gross margin rebounding to 4.0% from -10.1% previously.
Cost Structure: Cost of sales increased sharply, reflecting new REO and bauxite production, higher contract mining fees, inventory write-downs, and amortisation of acquisition premiums.
Improved Bottom Line: Loss before tax narrowed significantly, driven by the profitable contribution from the rare earth segment.

Operational and Strategic Developments

Rare Earth Expansion: The acquisition of a 40% stake in MCRE, a profitable and producing rare earth mine, has transformed the Group into a diversified mining player with exposure to high-growth REE markets.
Iron Ore Operations: The Chaah Mine has transitioned to underground mining, positioning the Group for improved long-term operational efficiency.
Gold Exploration: The Tenggaroh Gold Prospect shows early promise, with 12% of sampled assays indicating gold mineralisation.

Balance Sheet and Cash Flow

Asset Growth: Total assets increased from RM370.4m to RM598.6m, driven by the consolidation of rare earth mine properties and higher receivables.
Net Asset Value: NAV per share rose 30% to 82.39 Malaysian cents, reflecting asset accretion from the MCRE acquisition.
Liquidity: The Group ended the period with RM111.4m in cash and bank balances. Operating cash flows turned positive (RM9.0m inflow), while investing cash flows reflected continued capital investment in mining assets and exploration.
Leverage: Loan and borrowings were stable at RM14.3m, with no signs of distress.

Directors’ Remuneration

Remuneration Component	1H FY2026 (RM’000)	1H FY2025 (RM’000)	Change (%)
Short-term Employee Benefits	3,310	2,324	+42.5%
Remuneration to Directors	2,594	1,726	+50.3%
Directors’ Fees	454	437	+3.9%
Defined Contributions	262	161	+62.7%

Share Capital Changes and Buybacks

During the period, the Company issued 219 million new shares as part of the MCRE acquisition, increasing the share base to 636.7 million.
Treasury shares remained unchanged at 241,000, representing 0.038% of outstanding shares. No options, warrants, or convertibles were outstanding.

Dividends

No dividends were declared for 1H FY2026, consistent with the prior periods.

Related-Party Transactions and Unusual Fund Flows

Significant related-party transactions include services and rentals with entities related to the Managing Director, but all conducted under shareholder mandate and disclosed in compliance with regulatory requirements.
No unusual or unexplained fund flows were reported.

Exceptional Items and Non-Recurring Events

A one-off RM3.4m accounting gain from discounting deferred liabilities was recognized as other income.
Inventory write-downs (RM3.9m) and an RM7.7m amortisation charge for the acquisition premium of the rare earth business impacted results.
There was a temporary suspension of the Gerik Mine (rare earth) from mid-November 2025 to mid-January 2026, impacting mining-related expenditure, but operations have since resumed.

Events Impacting Business Environment

There were no reported natural disasters, legal disputes, or material regulatory changes impacting the period under review.
Favourable long-term demand trends for rare earths and gold are highlighted as supportive of the Group’s strategy.

Chairman’s Statement

“Building on its established mining expertise, the Group is accelerating its expansion into the REEs sector, supported by favourable structural tailwinds in the industry. REEs are critical components in a wide range of advanced technologies, including semiconductors, electric vehicles and renewable energy systems, and global demand for these minerals is expected to continue growing in the long term.

Following the completion of the Group’s acquisition of a 40% equity interest in MCRE in September 2025, the Group has gained exposure to a producing and profitable REE operation. The Gerik Mine utilises an environmentally responsible in-situ leaching extraction method, which avoids large-scale land clearing and minimises soil disturbance. This approach, coupled with the deposit’s relatively high concentration of Heavy Rare Earth Elements, positions the operation competitively along the global NdPr cost curve and supports margin resilience.

Within the Group’s iron ore segment, the Chaah Mine has fully transitioned to underground mining operations, which are designed to improve long-term operational efficiency and production stability. The Group is also encouraged by developments at its Tenggaroh Gold Prospect, where preliminary exploration results indicate that approximately 12.02% of assay samples have demonstrated potential gold mineralisation, presenting a promising exploration opportunity in a supportive gold price environment.

With the Group’s exposure to rare earth elements through its investment in MCRE, together with the ongoing underground mining operations at the Chaah Mine and continued exploration progress at the Tenggaroh Gold Prospect, the Group anticipates improved operational performance and remains cautiously optimistic about its prospects for FY2026.”

Tone: The Chairman’s statement is notably positive, citing structural tailwinds, margin resilience, and operational improvements, while maintaining cautious optimism about the company’s prospects.

Conclusion & Outlook

The 1H FY2026 results mark a pivotal transition for Southern Alliance Mining Ltd. The Group’s successful diversification into the rare earth sector has driven a sharp improvement in headline metrics, with revenue almost doubling and losses narrowing substantially. The rare earth business is now a core profit driver, offsetting legacy weaknesses in the iron ore segment. Operational cash flow has turned positive, asset values have surged, and the balance sheet remains robust.

The outlook is cautiously optimistic, anchored by long-term demand for REEs and gold, ongoing mining improvements, and potential further resource discoveries. Key risks include commodity price volatility, integration of new operations, and regulatory uncertainty, but the company appears well-positioned to benefit from its diversified asset base and industry trends.

Investor Recommendations

If you currently hold the stock:

The company has demonstrated a successful transition to profitable growth sectors, improved its financial footing, and offers exposure to rare earths and gold. Investors may consider holding their position to capture potential upside as the rare earth and gold prospects mature. Ongoing monitoring of operational delivery, rare earth production levels, and market conditions is advised.
If you do not currently hold the stock:

The Group is no longer a pure-play iron ore miner but a diversified mining company with exposure to high-demand minerals. The current period may present an entry opportunity for investors seeking exposure to rare earths, gold, and a turnaround story. However, as the company is still loss-making at the net profit line and with substantial integration and operational execution risk, new investors should size positions prudently and monitor future quarters for sustained profitability and cash flow.

Disclaimer: This analysis is based solely on the company’s official disclosures and does not constitute investment advice. Past performance is not necessarily indicative of future results. Investors should conduct their own due diligence and consult a qualified financial advisor before making investment decisions.