Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – Junior coal miner Wescoal expected to produce the first coal from its recently acquired Elandspruit asset, in Mpumalanga, in January next year, putting the company on track to meet its target of producing four-million tons of coal a year by 2016, CEO Andre Bojé said on Tuesday.
The JSE-listed miner acquired Elandspruit from miner Glencore for R93.8-million in August last year.
Speaking at a presentation of the company’s results for the year ended March 31, Bojé did, however, caution that the Elandspruit mine’s start-up date depended on the water use licence, which it had applied for in November last year, being granted by August 31, as was expected.
“If the water use licence [date] moves out, the whole project will move out, but we are looking forward to seeing coal from Elandspruit within the first quarter of next year,” he commented.
In addition to the water use licence, the company had also applied for environmental authorisations in terms of the National Environmental Management Act, and had concluded agreements to acquire the required surface rights.
“[Once the project comes on line] it will be a game-changer for Wescoal. We have a life-of-mine now of one-and-a-half years. The Khanyisa [and] Intibane extensions will give us another two to three years, but Elandspruit gives us 15 years,” Bojé told Mining Weekly Online.
Wescoal on Tuesday announced that it had, to ensure the quick start-up of Elandspruit, bought certain assets, including a coal processing plant, from coal miner Muhanga Mines for R42-million.
Bojé explained that building a new processing plant would have cost the company about R300-million and would not have been ready to operate as soon as Elandspruit started mining.
“The acquisition of [the] Muhanga plant gives Wescoal immediate access to a fully fledged beneficiation asset that is currently operational, has all the necessary regulatory approvals and extensive infrastructure to allow for a multiproduct operation while regulatory approvals are awaited for the Elandspruit site,” the coal miner stated.
The company’s board had approved future capital expenditure of R170-million for the commissioning of the Elandspruit colliery, including the acquisition of an existing plant, mine operational infrastructure, surface rights and production start-up costs.
Wescoal chairperson Robinson Ramaite said he was confident that the company would have the finance in place to develop the project.
“We will [also] be looking at more acquisitions in future, but will [first] focus on Elandspruit opening in January or February next year,” he added.
FINANCIAL RESULTS
Meanwhile, Bojé said the company was excited about its earnings for the financial year, but conceded that this could have been even higher.
“We are a bit disappointed, as we had a quarter where we had reduced takeoff from Eskom, which would have boosted the results, but overall we are comfortable and happy,” he said.
Wescoal’s revenue had increased by 69.5% during the year, to R1.1-billion.
Bojé noted that this was a significant milestone for the company, as it was the first time it had achieved revenue of R1-billion.
Headline earnings were up 37.9% to R26.7-million, while headline earnings a share increased by 28.7% to 15.7c.
The company declared a dividend of 3.8c a share, a 26.6% increase on that declared for the prior corresponding period.
The company’s shares were trading at R2.03 a share at 13:00 on Tuesday, 4.6% higher than Monday’s close of R1.94.