Wescoal shares rise as output is up 400%

WESCOAL yesterday gained 2.48 percent to trade at R2.48 a share on the JSE after the country’s junior coal explorer and producer’s earnings and production figures for the half year to September soared more than 400 percent as it ramped up its Elandspruit Colliery, outside Witbank.

Wescoal, which is valued at R589 million, said headline earnings a share jumped 445 percent to 27.8 cents from the 5.1c recorded during the corresponding period last year, with Elandspruit contributing the lion’s chunk of the 167 percent increase in the group’s production.

The colliery produced 1.3 million run-of-mine tons compared with 0.3 million tons during the start-up phase of the ramp up last year.

The company attributed the production boost to increased efficiencies and the completion of the optimisation projects at the nearby processing plant .

Wescoal chief executive Waheed Sulaiman said the mining division performance had been driven primarily by strong production and sales from operations at the flagship Elandspruit mine. The company agreed to lift its black empowerment shareholding to at least 51 percent from 37 percent at present.

Sulaiman said a R10m special dividend was declared and revenue increased by 37.1 percent or R281.3m to R1 039.4m, up from R758.1m last year.

He said: “Wescoal remains an active participant in the consolidation of the domestic junior coal mining sector with respect to reviewing value-enhancing opportunities and we have largely de-risked the cash flows and funding for further projects by securing Eskom offtake agreements and export contracts.”

The immediate priority, however, was to progress the black economic empowerment transaction which had been proposed to shareholders, he said.