South Africa-focused Buffalo Coal has narrowed its loss to R17.6-million in the six months ended June 30, from R54.6-million in the same period last year, with revenue increasing by 7.5% year-on-year to R187.3-million.
The company owns an interest in two coal mines in KwaZulu-Natal – Aviemore East anthracite mine and Magdalena bituminous mine, as well as an interest in two future coal mining projects – the Balgray anthracite project, which is an extension of the Aviemore East reserve, and the Aviemore North Adit anthracite project.
The Aviemore East mine will approach the end its life in the first quarter of next year. The extension of mining operations into Balgray will allow the current anthracite production levels to continue to operate economically for a further seven years from 2023 onwards.
Buffalo, which trades on the TSX-V and JSE, said it was actively pursuing options to secure the balance required for the development of Balgray, the bulk of which would be required in the second half of 2022 and the first quarter of 2023.
Subject to its ability to meet current production and sales forecasts, Buffalo believes that it should be able to generate positive operational cash flows in the short term.
However, its ability to ultimately continue operations over the medium to longer term is dependent on restructuring its financial position and securing the requisite funding for Balgray and the second phase of Magdalena’s expansion.
Buffalo said it would remain dependent upon continued financial support to achieve and sustain profitable levels of operation. This financial support would primarily cater to the settlement of the Investec borrowings and the funding of mining projects to the extent that they are not supported by internal cash generation.