Wescoal doubles interim earnings

[miningmx.com] — WESCOAL on Thursday reported an interim headline earnings increase of 125% for the period to end-September at 7.9 cents per share, from 3.5c a year ago.

The group’s revenue was up 54% to R334.3m. The increased turnover, together with a margin increase to 9.9% from 8.6%, resulted in a 69% increase in profit from continuing operations of R12.4m.

No interim dividend was declared.

The Khanyisa Colliery continued to perform well and in the period under review produced 887,000 tonnes, of which 546,000 tonnes was supplied to Eskom.

“The operation is well on track to mine the stated target of 1.2 million tonnes of ROM by the financial year end on 31 March 2011. It is forecast to have supplied Eskom 900,000 tonnes in the same period.”

The division had, however, incurred additional overheads related primarily to health and safety and environmental issues with specific focus on water use and management.

“The division’s performance in these areas has been excellent and management wants it to remain so and where possible, improve further,” the company said.

The recently announced acquisition of the Elandspruit reserve, situated approximately 5km south-west of Middelburg, Mpumalanga, would ensure coal sustainability for the next few years.

“It has an indicated resource level of 11.6 million tonnes, of which 4.3 million tonnes is metallurgical type coal, 4.1 million tonnes is thermal coal suitable for the inland and export markets,while the remainder is Eskom type product.”

The group said its coal washing operations at Blesboklaagte were again unprofitable for the six month period.

“The company is currently evaluating various options to get this operating at a profitable level.”

There had been no material changes in the resources of the company save for the acquisition of Elandspruit reserve which was expected to become unconditional in early 2011.

The company said a positive result was experienced in the trading division, with volumes up 17% as compared to the comparative six month period and a definite reversal of the downward trend experienced during the period September 2009 to March 2010.

The company said the Elandspruit feasibility was at an advanced stage and should be completed with the transaction becoming unconditional early in 2011.