LONDON (Alliance News) - Strategic Natural Resources PLC said Monday its pretax loss widened during the half-year as it reported the business's first revenues, though warned that if it cannot secure new funding sources soon, its shares may be suspended.
In its interim results for the six months to December 31, 2013, the company said its loss before tax widened on the previous year, coming in at GBP10.9 million, up from GBP1.3 million.
Strategic Natural Resources generated maiden revenues for the half-year of GBP699,000, from its first shipment of thermal grade coal exported from the Elitheni mine in September 2013, which it said demonstrates the success of the logistics and infrastructure from Indwe to the Port of East London.
The coal exploration and mining company said its losses increased due to a significant impairment charge of GBP7.1 million of previously capitalised development costs due to suspension of mining activities at the Elitheni mine. Strategic's administration costs more than doubled on the comparable period at GBP2.7 million, up from GBP1.3 million.
Mining operations at the Elitheni Mine have been and remain temporarily suspended pending an improvement in international coal prices and proper re-capitalisation of the business, said the company.
The firm, which is a 74% owner of coal exploration and mining assets located near Indwe in the Eastern Cape Province of South Africa, said as of the end of the reporting period, net assets had reduced to GBP1.4 million from GBP15.0 million the previous year.
Looking ahead, Strategic said discussions with its primary lender and major creditors are on-going; and that discussions continue with potential strategic investors. Funding remains an issue for the company, "Despite various discussions and negotiations getting to advanced stages, no deal has yet been agreed. The continuing depressed international coal price remains a deterrent to both economic production activity and potential investors who remain cautious on the sector."
The company said that it is facing acute working capital constraints and that, "If new sources of funding are not forthcoming in the near future, there is doubt that the business will be able to continue as a going concern. Should this be the case the Company's shares would likely be suspended from trading on AIM until such time that the Company could continue as a going concern.
However, the company said it remains focused on its objectives, including recommencing and boosting production at Elitheni, progress drilling on the strategically important Phase 5 area and work to establish local coal partnerships, with Chairman Andy Brennan adding, "despite current funding obstacles, the strategic potential of the business remains strong and, whilst there can be no guarantee, the Board remains optimistic that an acceptable funding package can be secured."
Shares in Strategic Natural Resources dropped Monday, trading 8.00% lower at 4.03 pence per share.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
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