This Mining Company’s Revenue Grew 20%, But Losses Exploded Over 1,000%. Here’s What’s Really Happening
At first glance, the full-year 2025 financial results for Southern Alliance Mining (SAM) seem to defy logic. The Malaysian iron ore producer reported a solid 20.3% increase in revenue, reaching RM199.5 million. Yet, in the same period, its loss before tax didn’t just grow—it skyrocketed by an astonishing 1,157.1%.
This is the kind of headline that raises immediate questions. How can a company sell more but lose exponentially more money? And what does this apparent contradiction tell us about the company’s actual health and its future? Peeling back the headline figures reveals a company navigating a tough market while making massive, transformative bets on its long-term survival and growth.
1. Takeaway 1: Higher Sales Met a Weaker Market
Revenue Grew, But Profits Fell.
The first part of the paradox—the revenue growth—is a story of operational execution. The 20.3% increase was largely fueled by a new income stream from bauxite sales, which contributed RM44.1 million. At the same time, the company successfully increased the sales volumes of its core iron ore products. Sales of iron ore concentrate were up 21.5%, iron ore tailings grew by 4.8%, and crushed iron ore sales surged by a remarkable 350%.
So, if SAM was selling more material than ever, why did profits collapse? The answer lies in market prices. A slowdown in demand from the steel industry caused the average realised selling price (ARSP) for iron ore to fall significantly. For instance, the price SAM received for its iron ore concentrate dropped by 30.8% compared to the previous year.
This punishing price environment didn’t just hurt current-year profits; it forced the company to re-evaluate the long-term value of its core assets, leading directly to the massive impairment charges we’ll see next. This dichotomy highlights a company with strong operational execution facing severe market-driven margin compression—a classic case of swimming upstream against powerful macroeconomic currents.
2. Takeaway 2: The Loss Isn’t a Cash Crisis, It’s an Accounting Story
It Was a “Paper Loss,” Not a Cash Flow Problem.
This is the most critical piece of the puzzle. A massive portion of the reported loss was not due to cash leaving the business but to non-cash accounting charges. In accounting, an “impairment” is a charge taken when the value of an asset on the books is deemed to be lower than its actual recoverable value.
SAM reported a huge non-cash impairment loss of RM26.1 million in FY2025. This was broken down into three main parts:
- RM18.9 million on mining assets, reflecting lower long-term forecasts for iron ore prices.
- RM5.0 million on joint ventures, a direct result of exploration licenses in Sabah not being renewed.
- RM2.2 million on an investment in a joint venture with a mining site in the state of Pahang, also due to decreased iron ore price forecasts.
The company itself provides a helpful illustration: without these one-off, non-cash charges, its loss before tax would have been RM5.4 million, not the headline figure of RM31.5 million.
Crucially, this accounting loss is very different from the company’s cash situation. Despite the market headwinds, the Group generated a positive operating cash flow of RM4.4 million and maintained a strong financial position with cash and bank balances of RM113.8 million.
3. Takeaway 3: A Company in Deep Transformation
They’re Making Big Bets on the Future.
Beyond the immediate financial results, the numbers reveal a company making deep, strategic changes designed to secure its future. The pain reflected in the FY2025 results is not just a market condition to be endured, but a direct motivator for these fundamental shifts.
The first major bet is a complete transition from open-pit to underground mining at its main Chaah Mine, a process completed in September 2023. This involved a significant RM33.3 million investment in tunnel infrastructure during FY2025. Unlike open-pit mining, which requires removing massive amounts of waste rock (overburden) to get to the ore, this new underground approach tunnels directly to the resource, promising greater efficiency and environmental sustainability over the long run.
The second big bet is diversification, a strategic pivot directly addressing the volatility of the iron ore market. To reduce its exposure, SAM is moving decisively into Rare Earth Elements (REEs). On 12 September 2025, it completed the acquisition of a 40% stake in MCRE Resources Sdn Bhd. REEs are critical minerals for high-tech manufacturing, including electric vehicles, semiconductors, and renewable energy systems. As governments worldwide are prioritising secure and sustainable supply chains for these critical minerals, SAM is positioning itself to meet a powerful and growing global demand.
As the Managing Director, Dato’ Sri Pek Kok Sam, explained:
“FY2025 was a challenging year marked by softer iron ore prices and the complexities of transitioning to underground mining. However, our resilient sales volume growth, prudent financial management and strategic investments in infrastructure provide a solid foundation for sustainable long-term value creation. We maintain an optimistic outlook for FY2026 and remain committed to diversifying our resource portfolio.”
Conclusion: A Foundation for the Future?
When you look beneath the shocking headline of a 1,157.1% surge in losses, the real story of Southern Alliance Mining emerges. It is a story of a company executing a deliberate, long-term transformation in the face of severe market pressure. It is increasing its sales, managing its cash, and making foundational investments in its future.
The company is absorbing significant short-term pain for what it hopes will be long-term, sustainable gain. The question for investors is whether the stability of underground mining and the high-tech promise of rare earths can outweigh the cyclical pressures of iron ore, turning today’s paper losses into tomorrow’s tangible value.
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