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Wescoal expects to report higher interim earnings

8th November 2018

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Wescoal expects its headline earnings a share for the six months to September 30 to increase by between 3.5% and 23.3% year-on-year to between 20.9c and 24.9c.

Earnings a share are expected to increase by between 2.2% and 17.8% to between 23c and 26.5c.

The increase in group profitability was driven by a good performance from the trading division and synergies realised from the acquisition of Keaton Energy Holdings, Wescoal said in a statement issued on Thursday.

The group is now better positioned to meet increased demand, both from Eskom and other customers, it added.

The enhanced flexibility of the enlarged resource base and associated mine infrastructure has facilitated increased run-of-mine (RoM) production and product variations to service the

market as and when required.

During the period, the group produced 3.2-million tonnes of RoM.

The group’s stronger balance sheet allowed it to trade more coal and increase saleable coal tonnes to 2.4-million tonnes.

The group’s Elandspruit mine continues to operate at steady-state production levels with multiple faces active, which allows for operational flexibility.

The mine produces about 250 000 t a month of RoM coal and the current reserve has a remaining life of about seven years.

Elandspruit’s production is trucked to the nearby processing plant for beneficiation. Total feed capacity of the plant is around 200 000 t/m.

The company has supplemented processing capacity by entering into an agreement with one of Elandspruit’s neighbours, which will see some of Elandspruit’s coal being treated on a toll basis. This arrangement has boosted Wescoal’s treatment capacity without the need for additional capital expenditure.

Post the acquisition of Keaton, the company now has a second large operation in the form

of Vanggatfontein, which has a remaining life of more than 11 years.

Vanggatfontein contributed 1.6-million tonnes to overall group RoM production during the period, compared with 900 000 t in the prior period.

The Vanggatfontein mining contractor, Liviero Mining, is currently in business rescue. Wescoal is working with the business rescue practitioner to minimise disruptions to mining operations.

Wescoal’s trading business continues to do well despite challenging economic conditions with sales volumes of about 600 000 t, an increase of 15.3% on the prior period.

Wescoal’s interim results are expected to be released on November 13.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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