SA Coal Mining narrows loss

Junior mining company South African Coal Mining Holdings (SACMH, SAH) reported on Friday that it had incurred an annual attributable loss of 10.2 million rand, narrower than its attributable loss of 31.1 million rand reported previously.

Releasing its reviewed provisional annual results for the year to end December 2010, the company showed a headline loss of 0.56 cents a share compared with 18.56 cents a share for the year to end December 2009.

The company also restated its results for the years to end December 2009 and 2008 after the company had valued only the estimated cost of rehabilitation of mining operations based on the estimated value of final closure of operations only.

The estimated cost of rehabilitation of historical mining operations shortfalls in existence prior to the acquisition of the Umlabu Colliery, as well as unrehabilitated operations in 2008, were previously not valued by the group.

While there was no impact on the statement of comprehensive income for the 2009 financial year, the restatement of the value of mineral rights increased non-current provisions in the 2008 and 2009 years by 13.9 million rand from the previously reported 34.4 million rand to 48.3 million rand.

The suspension of SACMH's shares on the JSE was lifted on Friday last week following almost two years of no trade.

SAMCH's shares were suspended in May 2009 after it failed to file a reviewed provisional report within the JSE's stipulated deadline.

Its Ilanga and Umlabu mines near Emalahleni in Mpumalanga were put on care and maintenance shortly thereafter.

SACMH is heavily reliant on Indian group JSW, which holds a controlling interest, for all funding.

Following the investment in the group by JSW and the financial support received, mining operations were resumed at Umlabu Colliery with effect from the beginning of October last year.

"Operations remain at an early stage with additional plant being commissioned during the last quarter of the financial year," the company said.

Subsequent to the year end, the company sanctioned the upgrade of the existing wash plant at an estimated cost of 18.9 million rand to increase capacity to 200 tons per hour.

Over and above this upgrade, a further 13.9 million rand in expenditure has been authorised for the coming year.

But SACMH's business is principally export-driven, with the key constraints on the business being logistical.

"SACMH operations will allow for the full utilisation of all rail allocation, which amounts to an annual capacity of 277,000 tonnes to the Richards Bay Coal Terminal during the next financial year," the company said.

It said additional export capacity was being investigated.

This would allow the company "to achieve a more sustainable operation", it added. - I-Net Bridge