Pet­min on the rise

Finweek English Edition - - INVESTMENT -

Ju­nior min­ing com­pany Pet­min, which has a n op­er­a­tiona l an­thracite mine in Somkhele in KwaZulu-Natal, and a de­vel­op­ment project in the North At­lantic Iron Cor­po­ra­tion (NAIC) in Canada, re­cently re­ported in­terim re­sults for the pe­riod end­ing De­cem­ber 2013.

What’s clear is that man­age­ment is re­ally ‘sweat­ing the as­sets’. Bradley Doig, busi­ness de­vel­op­ment ex­ec­u­tive at Pet­min, says Somkhele is run­ning at full power at the mo­ment. “This has al­lowed us to cut costs, specif­i­cally the min­ing cost.” This was borne out by the f inan­cials – the ex-mine gate cost dropped from R770/ton in the pre­vi­ous cor­re­spond­ing pe­riod, to R697/ton over the last six months. There was also an 86% in­crease in met­al­lur­gi­cal an­thracite pro­duc­tion.

Doig says Somkhele pro­duces about 1.2m tons per an­num of an­thracite, 50% of which goes to the do­mes­tic mar­ket and 50% to the ex­port mar­ket. “We Cents 260

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Apr 2013 truck our an­thracite to the dry bulk ter­mi­nal at Richard’s Bay and ex­port it from there. The do­mes­tic fer­rochrome pro­duc­ers who con­sume our an­thracite, and who also ex­port via Richards Bay, get their trucks to re­turn with prod­uct from our mines,” says Doig. This greatly re­duces the cost of de­liv­ered goods for the mine.

Somkhele is also pro­duc­ing strong cash f lows. Cash f lows from op­er­at­ing ac­tiv­i­ties amounted to R279m ver­sus op­er­at­ing profit of R79m, dur­ing the pe­riod. But as is so of­ten the case with re­source com­pa­nies, most of the money be­ing gen­er­ated by op­er­a­tions is be­ing spent p on pur­chases p of p plant and equipqp ment. This meant that Pet­min was

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