Johannesburg, South Africa — MININGREVIEW.COM — 17 March 2010 – Coal of Africa (CoAL) – one of the top-performing coal stocks on the JSE – plunged heavily into the red in the six months to ended 31 December 2009, and the company reported a taxed loss of A$35.2 million (R237.6 million).
Announcing its results here, the company said this loss compared with a loss of A$1.3 million (R8.7 million) in the comparable six months of 2008.
The statement said the reasons for the sharply higher losses included impairment charges of A$8.7 million (R58.7 million) on the group’s Holfontein thermal coal project; other impairments totalling A$6.2 million (R41.8 million), mainly against CoAL’s investments in Zimbabwe; and a A$3.4 million (R23 million) “take or pay” charge from the Matola Terminal in Mozambique.
CoAL secured a 1Mtpa export allocation at Matola on a “take or pay” basis, meaning that if it did not supply the coal it still had to pay for the use of that capacity at the terminal. The coal was supposed to come from the Mooiplaats thermal coal mine near Ermelo, which did not produce as planned.
CoAL MD Simon Farrell said: “As a result of the early difficulties experienced in establishing the mining operations at the Mooiplaats project, CoAL did not meet the terms of the agreement.
Meanwhile CoAL has received its new order mining right for the Vele coking coal project in Limpopo province. Farrell said mining would start immediately, once that right has been executed. He expected Vele to hit an annualised production rate of 1Mtpa of saleable coal within seven months of execution of the right because of the preparatory work already done on site.
Capital expenditure to complete Phase One of Vele is estimated at R350 million, of which R210 million had been spent by the end of December.
A further R200 million is required to double the Phase One capacity, and another R2.65 billion will be needed to complete Phase Two at Vele, which is intended to push annual sales production to 5Mtpa.