LONDON (Alliance News) - Coal of Africa Ltd Thursday said its pretax loss significantly narrowed in the last financial year as it waits to be awarded the necessary licences to construct the Makhado coal project.
The company reported a USD4.5 million pretax loss in the year ended June 30, narrowing from the heavy USD63.5 million loss made a year earlier. It did not book any revenue in the period, compared to the USD761,000 generated a year earlier.
The loss narrowed because the company cut costs and booked a USD14.5 million foreign exchange gain, compared to a USD36.3 million loss a year ago. Coal of Africa also had to pay USD10.6 million last year to settle and terminate its take-or-pay port facility agreement with Grinrod Corridor Management Proprietary Ltd, which was not repeated.
Finance, depreciation, employee benefits and consultancy fees and expenses all fell year-on-year.
Operationally, the company is focused on the Makhado coal project in South Africa after authorities awarded the company a new order mining right back in May. The project has a definitive feasibility study, but the company is waiting to be issued with the necessary integrated water use licence before it can progress the project.
"Coal of Africa has regular interactions with the Department of Water Affairs and expects that the integrated water use licence for Makhado will be granted in the second half of 2015 with the 26 month construction phase due to commence in the second half of 2016, post receipt of the integrated water use licence," said the company in a statement.
The company is aiming to construct a 12.6 million tonne per annum run of miene project which would produce around 2.3 million tonnes of hard coking coal and 3.2 million tonnes of thermal coal per year. That coal will be sold to the domestic market and via export.
Coking coal is used primarily by the steel and other metallurgical industries whilst thermal coal is more suitable for power generation.
Coal of Africa is also developing the Vele colliery, which is just north of the Makhado project. Once constructed, the colliery will be able to "produce multiple products simultaneously", it said.
The company has applied for an extension, with amendments, to the colliery's existing integrated water use licence, and Coal of Africa is expecting this licence to be issued "in due course". The current licence is set to expire in March 2016.
"The financial results for the year ended June 30, 2015 reflect the success of the turn-around-strategy that was necessary for Coal of Africa to be able to continue its significant progress within the current prevailing market conditions. The Company has resolved legacy issues, strengthened its balance sheet and made positive progress with respect to its flagship asset, the Makhado hard coking and thermal coal project," said Chief Executive David Brown.
"The next financial year will demonstrate the continued execution of the company's strategy with the focus on securing project financing for Makhado," he added.
Coal of Africa shares were down 4.4% to 3.47 pence per share on Thursday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
