Wescoal doubles mining volumes for second consecutive year, reports 311% HEPS increase
JSE-listed coal miner Wescoal delivered strong results for the financial year ended March 31.
The company last week reported a 311% increase in headline earnings per share (HEPS) to 46.6c for the financial year, compared with HEPS of 11.3c in the 2017 financial year.
Earnings per share increased by 314% to 48.1c, compared with the 11.6c reported for the prior comparable period.
Wescoal’s revenue grew by 67% to R3.5-billion, compared with R2.1-billion in the prior financial year, while gross profit increased by 54% to R565-million, compared with R367-million in the 2017 financial year.
Mining volumes doubled for the second consecutive year to 6.8-million tonnes run-of-mine (RoM), compared with 3.4-million tonnes RoM in the prior financial year.
Wescoal has achieved its objectives set in 2015 to transform the company, secure long-term debt funding of R440-million with Nedbank, increase production and successfully acquire and integrate Keaton Energy.
The R526.8-million Keaton acquisition in 2017 boosted Wescoal’s coal production and processing capability. Total coal resources increased to more than 300-million tonnes, while Wescoal now owns four mines, four processing plants and interests in other coal supply chain infrastructure.
The yearly ROM production target from the enlarged Wescoal group is on track for production of eight-million-tonnes a year in the next financial year.
“Wescoal has grown into a substantial mining and resource trading enterprise, having successfully acquired and integrated energy company Keaton Energy. The business continues to seek ways to increase its presence as a key component of South Africa’s energy supply chain, while looking at various diversification strategies, including export markets,” Wescoal CEO Waheed Sulaiman told Mining Weekly.
He added that Wescoal was considering options to diversify its asset base further.
“We [want] to acquire resources that allow us to produce a different type of product of coal. Currently, most of our resources are low-grade, which suits the Eskom market well, as well as the export market, but, if we can produce a higher-grade product, it would open up more opportunities.”
Wescoal sold about 6.5-million tonnes of coal in the financial year under review. It exports one-million to two-million tonnes of coal a year.
The coal miner is focusing its efforts on expanding its resource base in Mpumalanga, since the company has expertise in the area.
The coal market in South Africa was volatile, Sulaiman explained, adding that this was due to global events, as well as the political events in South Africa.
“However, we have set the business up to be robust and able to operate in a difficult trading environment.”
Wescoal's shares were 3% down on the JSE, but 5% higher on a 12-month basis. The company is currently capitalised at R940-billion.
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