JSE- and LSE-listed Hwange Colliery has reported a 139% year-on-year increase in gross profit to ZWL851-million in the six months ended June 30, partly owing to an increase in high-value coking coal sales.
The company has effectively narrowed its net loss to ZWL538-million, compared with a net loss of ZWL991-million posted for the six months ended June 30, 2020.
The net loss position was as a result of an exchange loss on foreign legacy debts and deferred tax of ZWL441-million, the company explains.
Hwange has thermal and coking coal mining and processing operations in Zimbabwe, but has been under administration as a result of a reconstruction order, issued by the country’s authorities, since October 2018.
The company’s production increased by 51% in the period under review, with the main challenges being around foreign currency to import spares and consumables.
Although coking coal sales increased by 28% year-on-year to 52 793 t, sales volumes were limited by washing capacity constraints. The company has since completed and commissioned a washing plant.
Total coal mined by the opencast operations was 806 404 t – a 55% increase year-on-year – while underground coal production was 19% higher year-on-year.
Hwange explains in a results statement published on October 11 that a lot of work has gone into stabilising the business.
“With the company being under reconstruction, it has been challenging to obtain working capital and long-term financing. However, as our performance continues to improve, funding support in the form of lines of credit from local banks and regional financiers become possible.
“We expect our operations to stabilise within the next 6 to 12 months. The immediate target is to produce at least 200 000 t a month, consistently.”
The company’s shares remain suspended on the Zimbabwe Stock Exchange owing to the reconstruction process.