Wednesday, May 22, 2024

Minergy’s profits up 21%

Minergy, the junior coal miner exulted its first  half  of the year sales results that were buoyed by fears of  energy crisis across western Europe  in the wake  of  Russia- Ukraine  war and the  northern hemisphere winter period. Total revenue in its full year results released on Thursday to June 30, 2023 increased by 21 percent to P 512 million,  and pure coal sales remained steady at P298 million  like -on -like.

“The year under review has been indeed one of  changing fortunes. During the first half of the year, Minergy operated, as reported, within unprecedented booming sales environment, which supported full production, with the  Group achieving  new sales and production records,” the company said on Thursday.

The  colliery  realised first operating profits and  EBITDA  thanks to the  good market conditions  during the first half,  but,  the bottom fell out in second  half of the year, which it  blamed  it on sudden crash in the international coal prices and the unexpected  cancellation of the  contract  by the contractor at the beginning of March 2023.

“ Sales volumes dropped from monthly average of about 67,000 tonnes per month  in the first half to about 40,000 tonnes per month in the second half,” the company said.

An analyst at  Imara Capital , Mogorosi Badisang said  Minergy woes  are also compounded by  its balance-sheet and over supply of coal in the market. “The major problem is debt on their book and they have been trying to  consolidate their balance-sheet,” he said.

However, Minergy  Chief Executive Officer,  Matthews Bagopi shrugged-off all concerns  about the future of the mine  on Friday when talking to Sunday Standard Online service.

“The focus of the business is to  finalise the appointment of the mining contractor, resume production and re-establish market relations that have been affected by the stoppage in March this year,” he said.

“Even though people believe that global coal markets prices have crashed, with reference the unprecedented performance since 2022, coal as a bulk commodity is still doing well compared to its long term historic performance. This long -terms  performance would be  around USD85(per ton) on the API4 index  —  established by Argus, McCloskey and South African Coal Report compared to the USD 120-130 we are currently experiencing,” he said, adding “the  USD 400 per tonnes  that existed during the boom was just a windfall”.

The colliery is targeting supplying  industrial , cement , steel and seaborne coal for exports. For seaborne its was using  Walvis Bay and Maputo seaports . It is also envisaging to have  a grip on the South African market that was disrupted by the  contractor’s stoppage.

The miner is operating  at the rich Masama coal fields  within a  an area of 671 kilometers squared.  The area has coal reserves at the tune of 376 million tonnes– that is expected to last for 100 years–  of which 80 million tonnes will be extracted using the opencast mining method.

With that it has an export capacity of  750,000 tonnes  per month “ under a blue-sky”.


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