Dineo Faku
WESCOAL was aiming to raise coal production to 5 million tons a year from 1.5 million tons in the next three to five years, chairman Robinson Ramaite said yesterday.
The JSE-listed coal junior posted a turnaround in financial results for the year to March with revenue rising by 13 percent to R630 million compared with the previous year.
Wescoal reported an operating profit of R26m, compared with last year’s operating loss of R21.4m, while headline earnings a share from continuing operations improved to 11.4c from a loss of 8.1c last year. The company did not declare dividends for the year.
Wescoal is involved in the mining, buying, selling and processing of coal. It is divided into trading and mining divisions, with mining contributing 43 percent to revenue and trading contributing the rest.
Andre Boje, the chief executive of Wescoal, said that he was confident of strong growth as the company would focus on maximising the profitability of its divisions.
In the trading division, Transnet Freight Rail carried a total of 23 million tons to the Richards Bay Coal Terminal during the financial year.
“Despite export prices decreasing to as low as $82 (R671) a ton, the… domestic prices have increased with demand remaining strong,” Boje said.
He said Wescoal had geared up to supply quality coal to Eskom, its biggest customer.
The company had sold 1.5 million tons of coal produced at its Khanyisa colliery in Mpumalanga to Eskom.
This colliery generated R291m in revenue in the year under review, 7.5 percent more than than last year.
Wescoal said it was in negotiations to secure a three-year contract with Eskom that would include coal from its Vlakvarkfontein resource.
Wescoal had spent R7.7m or 3.5 percent of its earnings on the rehabilitation of two mined out areas at its Khanyisa colliery between November last year and March this year.
Boje described the rehabilitation as a “short-term pain for long-term gain” because it did not want the Department of Mineral Resources to delay or prevent the awarding of its mineral right.
Wescoal expected to be issued with a mining right at its Vlakvarkfontein operations next month.
Boje said while he was happy with the results, the biggest challenge for all junior mining companies remained raising capital.
“The risk is high in junior mining companies. You have to put money in, in order to earn more money.”
The JSE-listed firm has been trading under a cautionary related to its Pegasus deal and another transaction.
The company said it would divulge more information in the next few weeks.
Last November the firm bought a 51 percent stake in the Pegasus deposit near Witbank that previously belonged to BHP Billiton.
Wescoal shares closed unchanged at 68c.