[miningmx.com] – WESCOAL Holdings established its credentials as a coal stock on the rise posting a strong set of interim results assisted by the recent acquisition of its Intibane colliery, and said it could grow further by acquisition.
Andre Boje, CEO of Wescoal Holdings, alluded to the possibility of other deals owing to the volatile nature of South Africa’s energy industry at present. “Major coal producers are reviewing all mineral assets on an ongoing basis and will dispose of
non-core operations,” Boje said in comments to the company’s published results.
“This could potentially bring opportunity for Wescoal to further enhance its asset base and sustainability,” he added. Shares in the R374m coal producer and trader, last at R2/share, have gained nearly 130% in 12 months.
Interim headline share earnings increased to R18m compared to R10.9m in the corresponding period of the previous financial year. At the operating level, earnings totalled R98m against R17m previously owing to the sale of the Vlaklaagte mineral assets – in a swap deal with GlencoreXstrata – which earned Wescoal Holdings R71m.
Cash holdings increased R68m to R89.1m from the beginning of the reporting period.
The performance was largely down to increased volumes as the company’s Intibane colliery came into production. The Intibane Colliery contributed 350,234 tonnes of the 895,185 tonnes total production for the interim period, Wescoal said in its results announcement. Both Intibane and Wescoal’s flagship operation, Khanyisa, are now at full production and will continue so for life of mine, it said.
There was a slight profit offset as the company’s trading operations toiled ahead of its combination with MacPhail Distributors, a trading company Wescoal is in the throes of buying with Competition Commission the only regulatory hurdle ahead of the acquisition. Coal trading activities will become a more substantial contributor to Wescoal’s earnings in the future.
The mineral swap with GlencoreXstrata sees Wescoal take possession of the Elandspruit property. Boje said environmental and water licence applications had been submitted to the Department of Mineral Resources.
“These processes are expected to be completed during the first half of 2014 following which the commissioning of the Elandspruit mine will commence with production
expected to begin during the last quarter of 2014,” Boje said.
Earlier this year, Boje forecast production of 1.6 million tonnes (mt) in the current financial year with some 700,000 tonnes due to be produced from Intibane. The balance of production would be sourced from Wescoal’s Khanyisa colliery of some 900,000 tonnes, less than in the previous financial year as production was recently shifted to underground following exhaustion of the higher yield open cast operation, said Boje.
