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(Alliance News) - Thungela Resources Ltd said on Monday it is likely to return to profitability given strong coal prices and performance after posting a loss last year.
Following the trading statement, shares in Thungela rose by 5.3% to ZAR74.21 on Monday morning in Johannesburg. In London, the stock surged 11% to 371.00 pence.
In a trading statement, the coal miner said demand for energy, including thermal coal, has continued to improve as the global economy recovered from the Covid-19 pandemic.
Thungela, which is listed on both the London and Johannesburg stock exchanges, was formed after Anglo American PLC spun off its thermal coal business in South Africa in June.
International coal supply from the major supply basins was disrupted by logistical constraints in China, Russia and Indonesia, community unrest in Colombia, and ongoing geopolitical tensions between China and Australia.
Demand for high-quality South African coal has remained firm.
The benchmark export coal price averaged USD123 a tonne for the year to date, with the month of October seeing the official settlement price at USD210. By the end of November the price had moderated to USD141.
Export saleable production for 2021 is expected to be 14.9 million tonnes, subject to no further deterioration in Transnet Freight Rail's performance or more stringent Covid-19 restrictions this month.
Export equity sales are expected to be 13.7 million tonnes, hampered by rail constraints.
Thungela said its first dividend will be a final payout for six months to December 31. It also confirmed that capital expenditure for the financial year will come in slightly below ZAR2.6 billion.
Cash flow generation has been robust on the back of strong benchmark export coal prices and narrower discounts, albeit in a context of lower export sales volumes. Thungela had a cash position of about ZAR8 billion on November 30.
"Strong cash generation since listing means that we enter FY2022 in a position of strength and we are excited about the opportunities to create value for our shareholders, our host communities as well as our employees," the company said.
By Artwell Dlamini; artwelldlamini@alliancenews.com
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