JOHANNESBURG (miningweekly.com) – Coal-mining junior Wescoal on Monday said it remained confident of maintaining its momentum as half-year earnings rise over 60%.
The JSE-listed group delivered headline earnings and headline earnings a share of R18.1-million and 11.4c respectively during the six months to September, a jump from the R10.9-million and 6.9c a share reported in the 2012 comparative period.
Basic earnings a share reached 37.2c a share during the period under review, up from the 6.8c apiece in the first half of 2012, while earnings before interest, tax, depreciation and amortisation increased nearly 75% to R48.7-million, Wescoal CEO André Boje said on Monday.
Speaking at the group’s half-year results presentation, in Rosebank, he said profit for the period, including the profit from the sale of its Vlaklaagte prospecting area, in Mpumalanga, to diversified miner GlencoreXstrata, increased significantly to R76.7-million, compared with the R10.7-million registered during the interim period in 2012.
Group revenue increased 32.5%, from R351.4-million in the six months to September 2012 to R465.7-million during the first half of 2013.
Revenue from the mining division surged from R143.1-million during the six months to September 2012 to R261.7-million during the six months to September 2013, with profit from operations rising 67.4% to R27.6-million, largely on the back of the R20-million commissioning of the Intibane colliery in April.
By September, the mine had produced 350 234 t of the total 895 185 t of coal produced for the interim period in 2013.
This was in line with the group’s aim for Khanyisa and Intibane – where the group would, this week, commission X-ray technology beneficiation – to deliver in excess of 1.6-million tons of coal by year-end.
Wescoal was progressing plans to extend the life-of-mine for both operations.
The conclusion of the Elandspruit transaction with GlencoreXstrata would push output higher to 2.4-million tons a year by the end of 2014, as the group targeted production of four-million tons a year of coal by 2016.
Wescoal was progressing with the necessary environmental authorisation and water licence applications and planned first production from Elandspruit was expected during the last quarter of 2014.
Further, the group was on the lookout for more potential acquisitions, as major coal producers reviewed their mineral assets and disposed of the noncore assets, said Boje.
The group’s acquisition of national coal distributor MacPhail for its lagging trading division would be a “game-changer” for Wescoal and provide the junior an advantage over other junior coal miners.
Revenue from the trading division during the first half of 2013 - at R204-million - was “disappointingly” flat and profits from the division fell by 57% from R6.7-million in the comparative period in 2012, to R2.9-million during the period under review.
However, the underperforming division was expected to get a boost once the MacPhail deal was closed, as the combined units would push trading revenue to over R1-billion, with volumes reaching 1.2-million tons a year.
It would provide the trading unit with a larger footprint, enhanced earnings and synergy savings.
The Competition Commission was expected to approve the transaction by November 13, after which the group would immediately move to integrate the two trading units.
Wescoal secured a R179-million debt facility – R79-million for the acquisition and R100-million for working capital – from Investec Bank.
Meanwhile, Boje would assume the role of Wescoal Trading MD, in addition to his position as CEO, after current MD Gerrie Coetzee retired at the end of November.