JSE-listed Hwange Colliery Company says it performance continues to improve, albeit at a slower pace than initially expected.
Reporting on its results for the six months ended June 30, it says the improvement in its performance was achieved despite the economic environment continuing to be challenging, as well as the impacts of the pandemic.
On an inflated adjusted basis, the performance improved to a gross profit of ZWL560-million and after-tax profit of ZWL577-million.
The company, however, swung to a net loss of ZWL992-million for the period compared with a net profit in the prior period, owing to an exchange loss on legacy foreign creditors.
Total production increased by 84% to 596 876 t for the period, largely as a result of an increase in production by the contractor.
The company says its target going forward is to ensure the production is skewed to own mining, as this is cheaper and more reliable, particularly given the company's history of cash flow challenges.
Therefore, the company has embarked on a recapitalisation programme, which, if successful, will result in production increasing by at least 50% in the coming year.
Hwange says it will need to consistently produce 200 000 t a month to have a sustainable business.
Focus for the first half of this year was on working capital availability for plant and machinery to improve availability. Repair work on the heavy media separation washing plant is at an advanced stage and has been delayed by foreign currency constraints and is expected to be commissioned in the fourth quarter.
Utility vehicles were also bought for the public relations and finance departments.
Hwange Colliery Company Limited plans to resume coke production from January 2023, as plans are under way to acquire a new coke oven battery and by-product recovery plant.
Hwange says a lot of work has gone into the stabilisation of the operations of the business.
However, owing to the current status of the company, it says it has been challenging to obtain both working capital and long-term financing for the business.
It noted that it was pleasing that as the company’s prospects improve, funders are becoming more interested in extending lines of credit to the business.
Therefore, Hwange says it is confident it will stabilise within the next 6 to 12 months.
Plan are under way to settle all local currency denominated legacy creditors, save for government, within the next six months.