Thungela outlines healthy performance in first year of listing
Coal miner Thungela Resources has, since its listing on June 7, experienced a period of rail constraints in South Africa, as well as logistical constraints in China, Russia, Indonesia and Colombia.
The company expects its export sellable production for the 2021 financial year to be just under 15-million tonnes, with cash flow generation coming in strong on the back of good benchmark export coal processing and narrower discounts, albeit in a context of lower export sales volumes.
Export equity sales for the 2021 financial year are expected to be 13.7-million tonnes.
Thungela will pay its maiden dividend for the six months ending December 31. The dividend will be declared at the time of the full-year results announcement in due course.
However, the company has advised that it will maintain a liquidity buffer of between R5-billion and R6-billion during and after periods of stronger market conditions, and all else being equal, between R2-billion and R3-billion following weaker market conditions.
Thungela had R8-billion of cash on hand at the end of November.
“While this year has seen a strong price recovery, we have also seen coal prices recede from their highs reached in October, with continued price volatility.
“It is, therefore, important that the group maintains an adequate level of liquidity in order to continue to operate confidently in lower price environments without compromising returns to shareholders, and to enable funding for key life extension projects.
“We are in a sound financial position and the group has adequate resources to deliver on our strategic capital allocation objectives,” the company reports.
With this in mind, Thungela expects to progress the studies of its key life extension projects, including Elders and the Zibulo North shaft, over the coming months and will be in a position to provide more detailed feedback at the full-year annual results presentation.
Thungela also continues to evaluate opportunities to enhance its business and optimise resource extraction, whether through value accretive acquisitions or through strategic partnerships.
“We have, accordingly, concluded a strategic partnership agreement with Nasonti, a partner that we have had a long and successful working relationship with, to establish a company through which we will enable increased saleable production.
“Through the agreement, a beneficiation plant will be re-established at Goedehoop South in order to commercially exploit the mineral residue material at the site.
“The attributable capital cost for Thungela will be about R200-million and it is estimated that our effective share of steady-state production will be up to one-million tonnes of low-cost saleable product a year for the next four years,” Thungela explains.
First coal is planned for March 2022.
Given the strong price environment and performance, Thungela is likely to return to profitability in respect of earnings a share and headline earnings a share for the 2021 financial year, following a loss in the 2020 financial year.
Since listing, Thungela says it has delivered on its purpose of responsibly creating value together for a shared future.
“Strong cash generation since listing means that we enter the 2022 financial year in a position of strength and we are excited about the opportunities to create value for our shareholders, our host communities, as well as our employees.”
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