PERTH (miningweekly.com) – South Africa-focused Continental Coal on Thursday announced that it had achieved significant cost reductions in its overheads, after initiating measures over the past 12 months.

The miner noted that administrative costs for 2013 were at their lowest level since 2010, down 54% on 2012 to A$9.5-million.

Finance costs for the year was also down 44% to A$11.4-million, while marketing and other costs were down by 70% on 2012, to A$3-million.

“The company continues to look at ways that it can optimise its business activities, particularly in the wake of the current market environment and the impact that the fall in export thermal coal prices has had on our business,” said CEO Don Turvey.

He noted that corporate administrative costs have been reduced for the third consecutive year, while marketing and other costs were at their lowest level in four years.

“We have delivered these cost reductions over the past 12 months and during some extremely volatile market conditions. These initiatives will continue, and we hope to be able to deliver further cost reductions in the coming year.”

As part of the cost reduction, Continental has restructured its Perth office over the past three months, reducing costs at the head office by some 70%.

Additionally, the board of directors have agreed to an immediate 25% reduction in salaries, and subject to shareholder approval, directors could elect to receive all or part of their fees in equity on a quarterly basis, based on the prevailing share price.

Continental also announced on Thursday that nonexecutive director James Leahy would step down from the board to assist with the company’s restructure.

PRODUCTION
Continental Coal on Thursday also reported that its Vlakvarkfontein and Ferreira coal mines had both achieved run-of-mine (RoM) production in excess of expectations for the quarter ended June 30.

Although above expectations for the quarter, RoM output at Vlakvarkfontein totalled 377 957 t for the quarter, 8% lower than the 412 764 t produced in the March quarter.

RoM production at the Ferreira mine amounted to 135 153 t, down 18% on the March quarter output of 165 917 t.

Output at the Penumbra mine also fell 11% quarter-on-quarter, from 52 876 t in the March quarter, to 47 247 t in the quarter under review.

Continental’s total RoM production for the quarter totalled 560 357 t, 11% lower than that 631 447 t produced in the March quarter.

Nevertheless, total RoM production for the full 2013 financial year rose 13% to 2.2-million tons, compared with the 1.9-million tons produced the year before.

Full-year production at Vlakvarkfontein increased by 23% to 1.5-million tons, while production at the Ferreira operation decreased by 19% year-on-year to 559 107 t.