JSE coal miner, Keaton Energy, maintained its steady growth for the six months to September 2014, with group revenue increasing by 10% to R783 million with gross profit up 6% to R124.5 million.
Total coal sales increased 7% to 1.45Mt, with cash generating Vanggatfontein Colliery maintained at optimal production levels and enhanced performance at Vaalkrantz Colliery. The group will continue to focus on the optimal operation of its existing collieries while continually improving the safety performance.
The safety performance at both group collieries remained excellent for the period. Vanggatfontein reported a lost time injury frequency rate (LTIFR) of 0.04 and Vaalkrantz a LTIFR of 0.12. “Keaton Energy commends all involved for this performance,” said CEO Mandi Glad.
Vanggatfontein delivered 1.20Mt of washed 2- and 4-Seam thermal coal to Eskom during the period, a 5% improvement on the previous corresponding production record. In addition, 5-Seam metallurgical coal sales increased 18% over the comparable period to 65 006t. No toll washing took place during the period as all capacity was utilised for own production. Discard and slurry sales reduced to 131 985t as discards were used in on-site construction activities.
Production of domestic and export anthracite at Vaalkrantz increased significantly to 191 898t compared to 154 145t in first half of 2014 This 24% growth highlights the success of the company’s drive to not only maintain, but grow production at this important source of high quality anthracite.
“Given that the geological conditions nonetheless remain challenging, we are pleased to report the improved safety performance that accompanied the increased production,” said Glad.
Group operating and financial performance
Group revenue increased by 10% to R783 million due to steady state operational performance at Vanggatfontein and higher domestic and export anthracite sales at Vaalkrantz. The group achieved a planned gross profit of R124.5 million or 16% of revenue. Cost of sales increased by R65.9 million or 11% on the back of increased production volumes at both Vanggatfontein and Vaalkrantz.
Production costs were managed closely and cost containment remains an on-going focus at both operations. The increase in other income relates mainly to the settlement of the DRA matter.
Profit from operations was not only consistent with the comparable period but also against plan. Net profit before tax decreased from R63.7 million to R57.6 million on the back of increased finance costs following the drawdown of the Investec finance facility in 2014, the benefit of which will flow once Moabsvelden commences production.
Headline earnings per share decreased from 19.4 cents at 30 September 2013 to 13.7 cents at period end. Given the consistent operational performance this difference is explained by the issue of 32 647 838 new shares in February 2014 and the increased finance costs referred to above.
Capital investment for the group totalled R242.8 million for the period, compared to R139.7 million at September 2013. The majority, R228.2 million, was spent at Vanggatfontein, primarily on on-going mine development relating to stripping costs and the opening of Pit 4.
Cash and cash equivalents increased by R43.7 million primarily due to cash flows generated from operating activities of R315.6 million, which were offset by cash flows from investing activities of R282.9 million.
“Our medium-term focus remains becoming a 5Mtpa producer. Emphasis in the short to mid-term will remain on optimal operation of our existing collieries whilst continually improving our safety performance,” said Glad.
“Additional revenue streams will flow from initiatives such as the belt filter plant at Vanggatfontein which will not only introduce a new saleable product but at the same time reduce our environmental footprint. Planning for our new colliery at Moabsvelden is proceeding largely to schedule albeit with some potential delays in receipt of certain regulatory approvals. Looking to year end we anticipate, as was communicated at our year-end results in June 2014, ending the year with similar results to last year.”