JOHANNESBURG (miningweekly.com) - JSE-listed diversified miner Exxaro has cut R1-billion off its planned R3-billion 2009 capital expenditure (capex) to take the total anticipated capex for the year to R2-billion.

The company, which increased revenue 23% to R7,1-billion in the half-year to June 30, also secured a R4,5-billion three-year bridging facility to finance its Medupi coal expansion.

New Exxaro CFO Wim de Klerk told Mining Weekly Online that, while Exxaro had given guidance that it would spend R3-billion this year, it decided to reduce that to R2-billion this year, in light of the poor economic conditions.

"We spent R600-million in the first half and we'll spend R1,4-billion in the second," De Klerk told Mining Weekly Online.

Of the R1,4-billion second-half capex, R500-million would be spent predominantly to complete a pigment plant in Australia, with the rest going on coal.

Commenting on the securing of the R4,5-billion three-year bridging facility, De Klerk said: "Medupi is a huge project, requiring R9-billion to be spent in the next few years."

Originally, Exxaro intended project financing Medupi, but when the money markets collapsed, it changed direction.

"With some of the banks, we decided to put a bridging facility in place. We came to the conclusion that R4,5-billion three-year bridging facility would suffice. Hopefully, by the time we derisk this project, the markets will have returned to normal and be cheaper than currently. Then we can go back and put some project funding in place for the rest of the project's term," he added.

The R4,5-billion is spread between international and local banks and development institutions.

De Klerk said that continuing to pay dividends was important to the company's black economic empowerment (BEE) partners, who had concluded the BEE deal using debt.

"Some may be disappointed that we moved down to a four earnings cover during this period, but there is still six months for the rest of the year and a lot of uncertainty in the market and we have decided to err on the conservative side and, come the end of December, perhaps move back to three times cover," he added to Mining Weekly Online.

Exxaro increased its net operating profit by 18% to R953-million in the first six months of the year to June 30 and declared an interim divident of 100c a share.

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