JOHANNESBURG (miningweekly.com) – JSE-listed mining services provider and coal miner Sentula Mining on Friday reported a R230-million loss for the half-year ended September 30, despite a 10% revenue increase to R1.35-billion.

Headline earnings, which strip out certain one-off costs, remained unchanged at 10.6c a share when compared with the same period last year.

Sentula attributed the R230-million loss to a number of one-off payments, including a 21% increase in the group’s preimpairment and inventory write-off, totalling R150-million.

Pretax expenses during the period amounted to R17-million and included R6.2-million associated with the Shanduka Resources transaction, R5.7-million in legal and forensic support for civil actions associated with misappropriated funds by previous management and R5.1-million for retrenchments as a result of ongoing restructuring within Megacube.

CEO Robin Berry said that global economic uncertainty and its impact on local mining continued to affect the rate of recovery and sustainable growth in the resources and energy sectors.

He told Mining Weekly Online that Sentula was expecting a volatile period ahead, making it important that the company consolidated its current operations and reached the point where it operated its five coal tenements in the Southern African region.

Berry previously indicated that half of Sentula’s future earnings would come from its own coal mining and marketing. Currently, most of its revenue arises from coal-mining contracting services.

“We aim to use our coal mining assets to employ our own coal mining expertise as these come on line; however it has taken longer to licence some of the properties which we originally bought as exploration licences,” he said.

Sentula planned to develop its tenements and said the potential also remained to either sell them at some stage, or create joint ventures (JV) to build critical mass.

“The inherent value underlying these projects is still intact,” Berry said.

In line with the strategy to develop a diversified portfolio of coal assets, the group has continued to undertake exploration activities across its various coal projects in Southern Africa. The projects could be broadly described as mining operations, comprising an operating mine, near development properties (projects which can be operational within 18 to 24 months) and exploration areas.

Nkomati Anthracite, which was placed on care and maintenance in May because of regulatory and environmental issues, was still awaiting a water licence. Mining was expected to restart early in 2012.

Further, Sentula, through its JV investments, has been granted new order prospecting rights over portions of the Bankfontein and Schoongezicht farms, in Mpumalanga. Exploration has been completed and mining right applications have been submitted for both of these properties.

Exploration drilling has also been completed at the Mulungwa project in Zambia, with the final phase of the feasibility programme, which included resource estimation, completion of the environmental-impact assessment, technical/mining investigations and financial modelling, having also been completed. A small-scale mining licence has been awarded and planning remains on target to start development during the latter part of 2012 financial year.

Meanwhile, the Asenjo JV with Jonah Capital and Aquila Resources, situated in Botswana, has continued exploration on its tenements. "The value of the large resource base is expected to be unlocked through the construction of rail infrastructure to port facilities in either Namibia or Mozambique, the provision of which is enjoying renewed interest in the region,” the company said.

Exploration on the Mabapa coking coal project, remained in abeyance, pending the securing of an option on a neighbouring property, which will enhance the critical mass of the overall project.

Megacube was marginally unprofitable, after the elimination of the abnormal expenses, during the period under review. However, Sentula said that further improvements in operational efficiencies and asset use were required before this company was expected to return to profitability.

Despite a tough six months, subsidiary CCT is well positioned to benefit from the resurgence in opencast mining opportunities along the eastern limb of the Bushveld Igneous Complex, supported by demand for ferrochrome and platinum-group metals.

JEF Drill and Blast grew its revenue and profit base substantially during the past six months and remained well positioned to deliver sustainable growth at current margins, for the foreseeable future.

The more favourable exchange rate during the period under review impacted positively on exploration subsidiary Geosearch’s revenue and margins. Political unrest in Côte d'Ivoire, that resulted in the suspension of operations during the second half of 2010 abated, and exploration restarted during June.

Sentula said its Ritchie Crane Hire subsidiary performed well, notwithstanding a reduction in demand for mobile craneage after the 2010 FIFA World Cup infrastructure development phase.

Meanwhile, Sentula said that a date for the Megacube/Umcebo Mining arbitration had been set down for April.

In the 2009 financial year, Megacube instituted legal proceedings against Umcebo Mining for the recovery of R29.8-million owing for work performed at its Middelkraal operation, following the termination of this contract. Umcebo instituted a counterclaim of R119.6-million, pertaining to alleged contractual breaches.

The company also stated that its legal and forensic fees should reduce materially, after the final sequestration order was granted against former MD Casper Scharrighuisen. Total civil judgements against Scharrighuisen stood at R383-million.

Sentula said it continued to support the National Prosecuting Authority in criminal actions against Scharrighuisen and former financial director Jason Holland, following the misappropriation of funds from Megacube in 2008.

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