Zinc project delays hit ELB

Engineering firm ELB swung into a loss in the year to end-June, as it grappled with delays and cost overruns at its Gamsberg zinc project.

Engineering firm ELB swung into a loss in the year to endJune, as it grappled with delays and cost overruns at its Gamsberg Zinc project.

The project near Aggeneys in the Northern Cape is SA’s largest greenfields mining project and will exploit one of the world’s largest zinc deposits. Revenue fell 40% to R2.2bn, ELB said after markets closed on Tuesday.

Pretax profit plunged 124%, translating into a R41m loss.

The company, which provides capital equipment and engineering services, posted a headline loss per share of 167c, a 143% fall from the year-earlier period. The group opted not to pay a dividend, having distributed 82c per share previously.

The losses relate to the Gamsberg Zinc project, but the group maintains it is still committed to it. The firm has said previously that the plant is operational at Gamsberg, but there have been delays in final performance testing, resulting in additional work to bring the plant to contracted specifications.

An increase in working capital commitments for Gamsberg resulted in a R126m cash outflow during the period, a rise of 80% from the previous year.

The company announced its disposal of B&W Instrumentation and Electrical during the period for only R1 with that company contributing R131m in losses for the year to end-June.

ELB, whose share price has lost 61.29% so far in 2019, said on Tuesday it remained a going concern and would continue to pursue its strategy of broadening the services it can offer to clients.