[miningmx.com] – KEATON Energy identified the building of its 1.4 million tonne a year (mtpa) Moabsvelden project as the single most important ‘challenge’ for the current (2015) financial year.
The development, which is a consequence of a successful R195m bid for Australian-listed Xceed Resources in February, will take company thermal and metallurgical coal output to around 4.3mt from the 2015 financial year assuming last year’s production figures at the firm’s existing Vanggatfontein and Vaalkrantz collieries.
The company has set itself a medium-term production target of about 5mpta over the next 36 months. In addition to Moabsvelden, it is working on several other projects the most mature of which is the 1.1mtpa Braakfontein project in South Africa’s KwaZulu-Natal province. “We intend to get to his target [5mtpa] sooner rather than later,” said Mandi Glad, CEO of Keaton Energy.
Shares in Keaton Energy were 2% higher in early trade on the Johannesburg Stock Exchange – equating to a doubling in company value over 12 months to R563m – following a strong showing for the 2014 financial year.
Keaton posted gross profit of R219m, a R236m turnaround in fortunes from the previous 2013 financial year. The improvement was largely on the back of a vast improvement in output from Vanggatfontein, a colliery in Mpumalanga province, which delivered 2.2mt of thermal coal to Eskom, a 45% increase year-on-year.
Vaalkrantz, a metallurgical mine in KwaZulu-Natal province, continues to struggle but Keaton said is was hoping to find additional adjacent reserves as geological conditions at the mine “become ever more difficult”.
Life of mine at the operation had been extended by a year and an application for additional land with the Department of Minerals would push out its life to three years, said Glad.
“Production costs were controlled tightly and cost containment remains a key focus at both operations,” the company said in an announcement to the JSE.
Headline share earnings increased to 30.3 cents from a loss of 30.2 cents in the previous financial year.
Cash on hand increased by R50m to R69.6m. “The figure that says it all is that cash flow from operations was R417m compared to R192m in the previous financial year,” said Jacques Rossouw, CFO of Keaton Energy.
Net debt to equity fell to 35%, which includes the Xceed acquisition, from 39% in the previous financial year.
Building of Moabsvelden will require some R300m in additional capital. “I’m going to throw that figure out there,” said Glad who added that R40m was already in the bank in terms of prepayment of 600,000 tonnes of coal from the project to Gunvor, which is also one of Keaton’s major shareholders.
A further R160m would be raised in debt finance with the balancing R100m to be supplied from the company’s cash flow.
“We will certainly be working towards dividends,” said Glad. “Since we are spending all the money on getting Moabsvelden developed, the most accurate guesstimate [regarding timing of the dividend] is in the coming two years,” she said.
