Tuesday, January 26, 2021

No dividends for Minergy shareholders as London listing gets postponed to 2019

Minergy Limited has no plans to distribute dividends to its shareholders until the Company is profitable and able to generate the required free cash flow.

The Company’s latest release of financial results for the year ended 30th June 2018, that no dividends have been distributed to date as cash is utilized to ensure operations are in place.

The company’s Non-executive Chairman ÔÇô Mokwena Morulane noted in the financial statement that dividends will only be payable once the Company is profitable and generates the required free cash flow. “It is proposed that dividends will be declared annually based on the financial performance of the Company for the 12 months ended 30 June, on a two times cover (of headline earnings per share) basis, and paid on or about October of each year. The Board shall determine the specifics of the dividend policy of the Company from time to time.”

The recent granting of the license to Minergy by the Ministry of Energy resources substantially reduces the risk for any potential investors. With Minergy set to undertake a secondary listing on AIM on the London Stock Exchange, Company executives indicate that this development provides the vital key to ensuring project viability, substantially underpinning the investment case. “Unfortunately, due to the regulatory delays, listing on the London Stock Exchange has been rescheduled to the first half of 2019,” the statement further revealed.

It is well understood that, contracts for the provision of site and bush clearing, civil works, power reticulation, water and waste management, road construction and weighbridges are in various stages of appointment. By January 2019 management expect to commission the washing plant and by February the first saleable coal should reach the market.

During the past 18 months, thermal coal prices increased by 33 percent, making it one of the world’s top five highest-performing commodities. This bodes extremely well for Minergy Limited and encourages the project team to ensure the mine is operational in the time.

In 2016, four million tonnes of coal were exported from South Africa to the African continent, this is forecast to rise to 38 million tonnes by 2030. Botswana and Minergy both have a significant role to play in fulfilling that increase in demand. Investors looking to invest in coal have lots of opportunity at the moment; the price of coal is rising, there is a deficit in supply and a strong demand, especially in the developing world which is driving up the prices and keeping them high. This presents the best timing to invest in coal.

For the reporting period Minergy remained in the development and exploration phase of its business plan albeit that significant progress has been made towards operational status.

Minergy is now able to break ground and invite contractors to start work immediately as well as to actively engage the local communities about job creation and several upliftment programmes, including improving the school and the clinic in the village closest to the mine, Medie, as well as bringing in electricity.

The license enables Minergy to attain the full potential of the Masama Coal Project, alongside the commitment to development of the coal mining, marketing and logistics industry in Botswana

With the award of the license and works now underway, Minergy is confident that its production milestone of January 2019 for the final commissioning of the mine will be met, with the first saleable product available in February 2019.

The mining contract has been awarded to Jarcon, a joint venture between IPP (a South African company) and Giant Plant, a Botswana company. The Build- Own-Operate-Transfer contract for the washing plant has been awarded to Pentalin Processing.

RELATED STORIES

Read this week's paper