Wescoal clobbered by write-offs

[miningmx.com] — WESCOAL shares barely reacted during trade on the JSE on Wednesday to the poor set of results for the year to end-March, which reported a loss of R43.7m (previous financial year – R5.7m profit).

The stock dropped 1 cent from Tuesday’s close to trade at 72c a share during the afternoon session.

Reasons for the losses included a string of provisions made in the second half of the year, including the write-off of all mining costs totalling R29.3m incurred at the Sutha Civils operation at the Khanyisa Colliery.

Wescoal also reported an accelerated write-off of R7.5m on mine establishment and mining costs as well as an impairment on goodwill of R4.8m at Chandler Coal.

Then there were increased costs and lower production associated with “flooding accelerated losses’ at the Blesboklaagte washing plant, which made an operating loss of R22.6m.

According to CEO Andre Boje, “whilst the write-offs and other actions mentioned in the review above were severe, the losses at Blesboklaagte will not recur and the potential profit from the sale of the plant should be realised in the new financial year.

“In addition the group balance sheet has been cleared of potential pitfalls that could affect earnings going forward.

“The board is positive that the measures taken and the renewed focus by both the trading and mining divisions will return the group to the expected profitability.’