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Kropz records $5.7m loss for 2023 as Elandsfontein ramps up

28th March 2024

By: Darren Parker

Creamer Media Contributing Editor Online

     

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As phosphate miner Kropz is still ramping up to steady-state production, the company recorded a $5.7-million gross loss for the 12 months ended December 31, 2023.

The company said on March 28 that the loss was largely owing to its Elandsfontein mine having to discount its sales prices as a new market entrant and to consider lower grades being achieved as part of the ramp-up process, coupled with higher production costs per tonne.

Moreover, with Elandsfontein operating below planned production levels, the operational cost per tonne remained elevated.

Kropz said sales from the trial production phase generated revenue of $30.2-million for the year.

During the year, Kropz said, it had faced significant challenges owing to unprecedented rainfall in the Western Cape. The heavy and persistent rains, combined with large volumes of in-pit water, resulted in severely wet mining conditions, posing obstacles to the company’s operations.

To address this issue, the company has undertaken various measures, with a primary focus on increasing in-pit drainage to alleviate the waterlogged conditions in its mining areas, as well as implementing ore stockpiling and blending strategies.

The extent of the ultra-fines, or natural slimes, encountered in the ore also limited Kropz’s production throughput.

In response, subsidiary Kropz Elandsfontein is currently making strategic investments in new equipment that will enable the plant to more effectively handle and process the challenging slimes material.

The Elandsfontein operation is expected to increase its production throughput by more than 40% following commissioning of the new equipment. The project is expected to be fully operational by the end of the second quarter.

In addition to addressing the wet mining conditions, Kropz Elandsfontein is still employing separating and stockpiling techniques of the various ore materials encountered at the site. The company said it is analysing and testing the various ore types being stockpiled to identify and refine the appropriate method of mining and processing the stockpiles to drive efficiencies.

“The Elandsfontein mine is still in its trial production phase and further challenges can be expected as it progresses towards full production,” Kropz warned.

The company also highlighted that it had achieved one year free of lost-time injuries.

As of the end of 2023, the carrying value of property, plant, equipment, and exploration assets stood at $112.6-million, a slight increase from $111.4-million recorded on December 31, 2022. Moreover, the company held cash reserves of $3-million at the end of 2023, compared with $2.1-million at the end of 2022.

Additionally, shareholder loans and derivatives amounted to $90.5-million as of December 31, 2023, showing an increase from $55.1-million in the previous year.

Trade and other payables amounted to $8.8-million at year-end, up from $7.3-million at the end of 2022.

In a bid to address immediate cash requirements, Kropz, Kropz Elandsfontein and ARC Fund reached an agreement, on September 14 last year, to a further R250-million bridge loan facility for Kropz Elandsfontein. By the end of the year, R250-million had been drawn from this facility.

Further, in December last year, Kropz Elandsfontein secured an additional R115-million bridge loan facility with ARC Fund to address immediate cash requirements. By the end of the year, R62.5-million had been drawn from this facility.

Meanwhile, Kropz said it was still working to identify potential funding solutions for the development of the Hinda project in Congo-Brazzaville.

The company said engagement was ongoing with the local government regarding project development and progress. However, a reduced-sized project is being assessed to propose a fit-for-purpose low capital expenditure project to prove the concept of producing phosphate concentrate in Congo-Brazzaville and then exporting it.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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