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Sipho Nkosi, Exxaro CEO, said that the company was proceeding with plans to divest from its non-core assets, and that it was on track to grow its coal, iron ore, ferrous metals and mineral sands business units.

"After fulfilment of all suspensive conditions, the Glen Douglas dolomite mine was sold to Afrimat effective January 1 2011. The investment was therefore effectively only accounted for one day in the year ended December 2011.

"The coal business will continue to focus on optimising and growing its market position in the supply of coal to Eskom as well as the domestic and export markets."

Exxaro has also raised its capital expenditure (Capex) from R4.9 billion rand in 2011, to an estimated R10.9 billion for the 2012 financial year.

The company has allocated an estimated R3.3 billion towards the Grootegeluk Medupi expansion project (GEMP) in Limpopo.

GEMP has been earmarked to supply Eskom with 14 million tonnes of coal per annum and is expected to deliver its first batch in May 2012.

Despite delays in the construction of the plant, Nkosi announced that 75% of construction work at GEMP had been completed, and that delivery will be under a "take or pay" principle, based on the contract the company and the state-owned power supplier agreed to.

Exxaro also announced that it was still waiting for the outcome of its offer to purchase a 66% stake in Australia listed and domiciled Africa Iron Ore limited, which will give it exposure to underdeveloped iron ore projects.

The company also said that it had managed to reduce its net debt by R2.5 billion in the past year and as a result managed to achieve a strong balance sheet in that regard.

It also reported a 24% increase in revenue to R21.3 billion, largely due to the increase in selling prices despite a drop in production volumes.

Operating profits went up by 53% to R4 billion, but it excluded the impact of impairment reversals and charges.

Headline earnings per share for the year ended December were up by 40% to R20.98, and the company declared a final dividend of 500 cents, bringing the total dividend for 2011 to 800 cents.

In its financial results, the company noted that the coal business reported a 24% increase in net operating profit to R3.4 billion at an operating margin of 26% as higher selling prices and stronger international demand were only partially negated by lower local demand.

The weaker domestic performance was partially as a result of lower demand from ArcelorMittal SA (AMSA) as well as lower sales volumes from operations tied to Eskom.

"Despite the lower sales volumes from the mines tied to Eskom, these operations recorded a 66% increase in net operating profit to R309 million, resulting from a revised manner by which the group applies the discount rates on the calculation and recovery of rehabilitation costs contributing R132 million to this number. The net impact of the revised calculation results in additional rehabilitation costs recovered from Eskom," the company said.