51%

2 million tons of coal a year. This is expected to double the group’s output to about 4 million tons in the medium term to see the group generating the bulk of its income from higher-margin mining activities.

Earlier, the company said a gross special dividend of 4.2c an ordinary share would be declared after it declared a zero dividend last year.

Wescoal announced last month that it would pay a R10 million special dividend to shareholders before its black economic empowerment deal.

Wescoal’s investment case was solidified last month after management finally addressed the company’s black ownership level, which had fallen short of the 50 percent required by Eskom of all its suppliers. Wescoal’s target for black ownership this year

The company committed to increasing its black ownership to at least 51 percent by the end of this year from 37 percent making it possible for the company to secure medium- to long-term kom.

Prior to the deal, the company operated on short-term contracts, which posed a significant risk to performance. Trading activities Eskom is forcing mining companies to find empowerment partners following its requirement that 50 percent or more of suppliers be in black hands in the future.

Wescoal’s revenue in the year to March dropped by 5 percent, largely due to reduced sales from trading activities.

Management attributed this to a more conservative credit policy and a tough business environment. Profitability at operating level, however, improved because of a strong performance from the highermargin activities.

The mining division increased its contribution to operating profit to 79 percent, which helped the operating margin improve to 6.3 percent compared with 2.8 percent. This translated into 79 percent growth in headline earnings.

The company’s financial results for the interim period ended 30 September are expected to be released on November 1, 2016.