Dineo Faku
Sentula Mining’s stock fell as much as 7.7 percent on the JSE yesterday after the group said disposals of non-core assets hurt its revenue in the year to March.
However, the shares closed unchanged at 26c on the day, valuing the group at R153m.
The mining services company said revenue had dropped by 24 percent to R1.6 billion.
No dividend was declared.
Sentula’s portfolio includes Benicon Opencast Mining, Geosearch, which is one of Africa’s largest exploration companies, and Benicon Sales, which focuses on the international procurement of capital equipment for the group.
The company said basic loss a share from continuing operations had decreased to 47.7c from R1.48 last year, but its headline loss a share rose to 43.7c from 24.9c last year.
The group’s earnings were affected by a R69 million impairment of plant and equipment at Geosearch, and a R375m impairment on mineral rights held for sale, on a pretax basis, due to the Benicon Coal and Benicon Mining disposals.
Sentula’s chief executive, Robin Berry, said the impairments were necessary at this time. For example, at its Geosearch subsidiary, hopes of an uptick had not materialised.
“One has to take a look at the market for exploration, which has been depressed, to see the challenges,” Berry said.
Sentula also wrote down R35m of goodwill relating to its Classic Challenge Trading division, and took into account R12m in retrenchment costs during the period.
A R40m provision for the slow-moving inventory in Benicon Sales on a pretax basis also hurt its revenue.
The opencast mining unit was under pressure and continued trading under tough conditions as margins stayed tight.
Berry said the resolution of the five-month platinum strike signalled a recovery for the mining industry.
“With platinum companies going back to work it means the recovery of the sector is next,” he said.
The group restructured its operations during the period. This resulted in 400 job cuts at Geosearch’s east and west African operations, 300 job cuts at Benicon and 40 jobs locally.
Sentula said it had consolidated its mining services business and significantly reduced net debt by R203m. The group, which also provides exploration services to the platinum belt, planned to cut costs, including those at the head office, by 5 percent this year.
The stock is down 36 percent in the year to date after it announced the sale of its stake in Nkomati anthracite mine in Mpumalanga.
“Our initiatives to dispose of non-core assets are well advanced and will provide the group with the ability to extinguish its residual historic debt and to focus on growing its suite of diversified mining services businesses.”
“Sentula continues to explore opportunities with its strategic empowerment partner Thebe Mining Resources to unlock value across the group,” Berry said.