Junior mining resource company Canaf states the lower than tradi- tional operating margin it experienced for the three months ending January 31 is a result of a maintenance shutdown at its South African calcined anthracite operation.
The Africa-focused company, which owns 100% of local carbon producer Quantum Screening & Crushing, reports that cost of sales at $2 572 874 reduced the operating margin to 6,6%, or $180 715.
The planned major maintenance shutdown comprised relining an emissions stack and completing preventive maintenance on the refractories of both the kilns at Quantum’s plant, in Newcastle, KwaZulu-Natal.
Further, the Vancouver-based com- pany is planning to use coal gasifiers to heat the kilns to vastly reduce the cost of electricity.
The two kilns operate around the clock, devolatising the raw material anthracite.
Consulting engineers, who designed and commissioned both kilns, are expected to complete their proposals to switch the number two kiln to lower-cost gasifiers over the next four months.
Once the number two kiln has com- pleted a successful operating trial period, Canaf also intends to switch the number one kiln to gasification.
The company expects to fund the cost of this switch out of operating cash flow. The resulting reduction in operating costs will have a positive impact on the com- pany’s gross margin.
The bulk of Quantum’s feedstock anthra- cite is supplied by Springlake colliery, which has reserves in excess of 30 years and is located in the nearby town of Dundee. Calcined anthracite is a product used as a replacement to coke in the steel and manganese manufacturing process.
Quatum’s two largest clients are steel producer ArcelorMittal Steel and global resources company BHP Billiton.