As mining services provider and coal miner Sentula Mining entered into talks for the sale of its shareholding in the Nkomati anthracite mine, CEO Robin Berry said the group would prioritise the disposal of most of its remaining coal assets during the next financial year.

JSE-listed Sentula last week entered into negotiations with a consortium comprising Miranda, Mochiba Investments and Jay & Jayendra for the disposal of its 60% stake in the Mpumalanga-based Nkomati mine.

The Mpumalanga Economic Growth Agency owns the remaining 40% shareholding in the mine, which has 7.2-million tons of proven reserves and 4.4-million tons of indicated resources, with an 80-year life-of-mine.

The anthracite mine, which was acquired in 2008 and placed on care and maintenance in 2011, was in the process of being brought back into production after receiving an inte-grated water-use licence and approval for an amended environmental management programme in November.

The openpit had since been dewatered and the group was in the final stages of infra-structure refurbishment.

Sentula also had stakes in four other coal assets, two of which were in South Africa, including the Schoongezicht coal prospecting right, near Delmas, in Mpumalanga, which Berry commented would be sold to Miniandante Proprietary for R22-million.

Berry told Mining Weekly that the disposal of Sentula’s remaining coal assets was a priority and would be completed to a “large extent” during the year, in line with the group’s strategy of monetising and extracting value from its investments.

Potential Acquirers

Sentula expected to finalise the potential sale of its remaining South Africa-based coal investment, the R172-million near-development Bankfontein coal project, near Ermelo, in Mpumalanga, by August or September, after identifying potential acquirers, he said.

The potential mine, which would produce about 4.7-million tons of opencast run-of-mine coal over about seven years, was expected to start operations this year.

In Zambia, Sentula was awarded a small-scale mining licence for its 25%-owned Mulungwa project, which Berry noted con-tinued to be maintained as the assessment of potential buyers continued.

The Asenjo joint venture project, in Botswana, in which Sentula held 25%, was also up for sale, and Sentula, along with its partners, Jonah Capital and Aquila Resources, had engaged the services of an independent adviser to pursue a process to dispose of the remaining assets in Asenjo.

Sentula had extended its exploration down-scaling to the international operations of subsidiary, Geosearch, as exploration activities worldwide slowed, shifting the entire subsidiary into a “holding pattern”.

“Subdued global economic activity continues to weigh heavily on commodity prices in the platinum-group metals (PGM), gold and seaborne-traded metallurgical coal sectors, significantly reducing the visibility of exploration spend in these areas across the continent,” Berry commented.

Earlier this year, a substantial decline in gold and platinum prices, as well as significant disruptions in the South African mining industry, particularly the PGM sector, resulted in a 90% loss in domestic business and a resultant reduction in exploration expenditure, leading to a R3.6-million restructure and downscaling of Geosearch’s South African operations.

“The world finds itself in a tough space, and . . . the price of the commodities reflects that, but it always comes back into balance, and . . . exploration [would revive] faster than new projects,” Berry said.

He expected that exploration would remain subdued for the remainder of the year, but activities would pick up early next year to align with demand.

Meanwhile, Sentula, which narrowed in on its core activities of mining services, would, during the first half of the 2014 financial year consolidate CCT into Benicon to extract synergies and further drive the efficiencies of operations within the two subsidiaries.

Sentula would continue to invest in business units Richie Crane Hire and JEF Drill & Blast, which were “good” businesses offering opportunities for growth.

Financial Results

Sentula decided not to declare a dividend for the year ended March, as, given declining revenue and the considerable challenges faced in South Africa’s mining sector, Sentula continued to record significant losses.

The group reported a loss of R899.9-million for the 12 months to March, compared with the loss of R532.1-million posted in the prior year.

Revenue fell 17%, from R2.52-billion in 2012 to R2.08-billion during 2013.

Sentula recorded a basic loss per share of 150.6c for the year under review, down from the basic loss a share of 88.9c in 2012, while headline losses a share fell to 27c in 2013, compared with the headline earnings of 21.7c achieved in the prior year.

The financial performance was impacted on by several multimillion-rand writedowns and impairments on equipment, goodwill and assets held for sale, besides others.

“Sentula’s bulk earthmoving businesses, however, through their exposure to the local coal sector, have experienced a far more predictable demand profile. “Having disposed of the remaining assets in Megacube and initiated a process to monetise the stakes in its various coal investments, Sentula is now well positioned to focus on its core remaining mining services entities,” Berry concluded.