JSE-listed Wescoal has announced its annual results for the 12 months to 31 March 2019. Challenging trading conditions saw the Group deliver a weak overall performance for the full year.
The second half of the year was marred by labour disruptions, heavy rainfalls, production downtime, and tough economic conditions which all contributed to the overall poor performance.
Despite these challenges Wescoal managed to record considerable growth in revenue, cash generation and dividends.
Recently appointed Wescoal CEO, Reginald Demana says:
“It has been a tough and challenging year for both Wescoal and the mining sector as a whole.
“The second half performance was weaker than the first half and overall we are disappointed with the results.
“The Vanggatfontein mining contractor change-over announced late last year, subsequently led to labour disruptions with an adverse impact on production and overall performance.
“We continue to manage the operational risk through continuous engagement with new mining contractor Stefanutti Stocks to aid in ramping up production for FY2020.
“The suspension of the underground mining section in Elandspruit and above average seasonal rainfall also contributed to the drop in group performance.”
A decrease in coal production of around a million tons and an unsuccessful acquisition bid for Universal Coal were negative impacts.
Intibane, a short life of mine asset, was disposed during the year which added to the decline in production.
However, following the Aztolinx buy-out at Khanyisa, Wescoal now own 100% of that operation, further optimising the investment.
Performance at Khanyisa has been solid.
The reconstituted board and strengthened executive and operational management is wholly committed to returning the company to its growth path through optimisation and alignment with the strategic pillars of stability, sustainability and scalability.
The company successfully secured long-term funding for up to R1.6 billion including an accordion facility as required.
This together with strong cash generation, will enable Wescoal to fund its development projects and to convert selected value accretive acquisition opportunities that meet its criteria.
“We have made positive strides to reach our target of 8 million tonnes per annum ROM and we continue to look at both organic and inorganic growth opportunities in our aim to become a leading and reliable source of coal.”