Records strong 110% coal sales increase in 2021
Bolstered by Botswana, Namibia and SA markets
Minergy receives P125 million funding from MDCB
Blue chip coal mining company Minergy Limited sold 416 185 tonnes of coal during the 2021 financial year compared to 198 057 tonnes in 2020, reflecting 110% increase in sales.
The company attributed the strong performance to growing coal demand in Botswana and two neighbouring countries of South Africa and Namibia respectively.
Led by Chief Executive Officer (CEO) Morné du Plessis, the Botswana Stock Exchange (BSE) listed company also disclosed that sales for June 2021 exceeded 56 000 tonnes, a record since inception.
The average sales pricing in the mine increased late in the financial year on the back of the buoyant international prices and a strengthening South African Rand.
“Minergy achieved record breaking production and sales during the year, despite operational constraints resulting from the impact of COVID-19 restrictions on logistics, excessive rain and the consequences of delays in concluding funding. The company has made great strides towards nameplate capacity despite trying conditions and expects to reach consistent steady-state levels of production in the 2022 financial year,” the Masama Coal Mine owner stressed.
For the 2021 financial year, the company said it generated revenue of P193 million (2020: P81 million), incurred costs of sales of P256 million (2020: P150 million) and operating costs of P23 million (2020: P31 million), resulting in an operating loss of the P86 million (2020: P100 million).
“Finance costs of P51 million (2020: P17 million) were incurred, bringing the net loss before taxation to P136 million (2020: P117 million). Financial performance during the 2021 financial year can be divided into two distinct periods with the very different operating environments, namely: the first eight-month period (July 2020 – February 2021), which was negatively impacted by delayed funding, COVID-19 impacts and excessive rain and the last four-month period (March – June 2021), which was a more stable production environment moving toward nameplate capacity,” it said.
The adverse conditions in the first eight-month period contributed to 86% of the total gross loss.
On the other hand, Minergy said the stable four-month period alone contributed to 50% of total sales value, which helped to decrease monthly gross losses, albeit a below breakeven level.
“Initially, production and sales recovered in July and August 2020, with the easing of COVID-19 restrictions and was bolstered by the successful opening of the rail siding. However … mining and plant throughput challenges impacted sales output. Heavy rain experienced from December 2020 to February 2021 flooded the mine pits, affecting production and made mine accessibility difficult, also impacting sales,” the company added.
When previously giving a market update for the first six months, du Plessis said sales volumes for the 2021 financial year doubled as when compared to the previous year.
He said Minergy benefited from price momentum of a burgeoning commodity market, including South African coal which has seen the highest export coal pricing in a decade.
Meanwhile, Minergy announced that P125 million of an additional convertible debt funding was secured through the Minerals Development Company Botswana (MDCB).
According to the company, the final tranche of MDCB funding was paid post the financial year-end with the earlier tranche received in December 2020. Minergy stated that this final and critical debt funding will allow the business to reach nameplate capacity in the 2022 financial year.
“In conjunction with major funders, Minergy has also successfully restructured its debt to support stabilised mining operations. Minergy continues to assess the strategic investment partners to fund growth opportunities and to ensure operational sustainability of the Masama Coal Mine. The capital raise, as approved by shareholders in February 2021, is gaining a momentum with the positive developments expected,” said the company giving an update on the findings in 2021.