The increased profit that junior coal miner Wescoal earned from its flagship Elandspruit mine in the year to March would be offset by once-off costs related to its black economic empowerment (BEE) transaction and acquisition of Keaton Energy, it said on Monday.
Wescoal shares slipped almost 5% to 200c on the news, moving against the trend of the general mining index, which added almost 2%.
The Richards Bay Coal Terminal index fell 3% to $78.40 a tonne last week.
Wescoal, which will release its year-end report on June 28, said its headline earnings would halve to between 10.4c and 12.4c a share from 27.1c a year ago. Earnings were eroded by a non-cash discount of 32c per share from the BEE transaction, a 7c a share dilution effect from the issue of new shares to black shareholders and about 3c per share representing transaction costs on acquiring Keaton.
In November, Wescoal agreed with its black shareholders, including chairman Robinson Ramaite, that they would increase their stake in the company to 59% from 37% to meet Eskom’s requirement that its coal suppliers have more than 50% black shareholding. Most of Wescoal’s coal is sold to Eskom.
In February, Wescoal offered to buy junior miner Keaton Energy for R350m in cash, partly funded from the injection it received from its BEE transaction and 86.7-million new Wescoal shares.
The offer was approved by Wescoal’s and Keaton’s shareholders and the competition authorities. It is now completing the final conditions.
Wescoal CEO Waheed Sulaiman said Wescoal was intent on being a consolidator in the junior coal sector and would focus on opportunities to acquire additional resources and strategic interests in logistics infrastructure.
He said Wescoal’s Khanyisa complex was ramping up to production of 100,000 run-of-mine tonnes a month in the current financial year. Its Elandspruit and Intibane mines were achieving their targets.
In the past financial year the company produced 3.3-million tonnes of coal and with the addition of the Keaton operations it should achieve 8-million run-of-mine tonnes a year in the short to medium term.