[miningmx.com] — SENTULA Mining on Friday reported a 10% rise in first-half headline earnings, and said outlook for its businesses was strong on the back of rising demand from the coal industry.
Sentula, whose businesses include opencast mining services, exploration drilling, crane hire and coal mining, said demand for its services was rising as South African coal producers seek to boost their exports to satisfy growing demand from Asia.
“If you look at our business make up, about 60 percent of our revenue and almost 70 percent of our operating profit is from our earth moving businesses which are predominantly in the coal sector… they should do well on the back of that demand,” CEO Robin BerryRobin Berry told Reuters.
While in the near-term future most of its earnings will come from the services division, Sentula also hopes to grow its coal mining business.
Its two coal assets in South Africa, Schoongezicht and Bankfontein, should come into production within the next 18 months and will together produce around two million tonnes, which could be used to supply power utility Eskom or exports.
Its Mulungwa project in Zambia, in which the company has a 25% stake via an investment in Indongo Mining Ltd, is expected to yield 500,000 tonnes of coal per year, all of which will be used for the domestic market.
“The market is strong for domestic coal production in Zambia. They are very short of energy sources,” Berry said.
Berry said Sentula was also looking for other coal assets in the region, although it had nothing lined up at the moment.
“The timing is right. There are great opportunities out there,” he said.
Sentula is in advanced talks with bankers for a revolving capital financing facility to fund its capital expansion.
Earlier this year, Sentula sold its 49.9% stake in the Koornfontein coal mine in South Africa for R670m to reduce its debt, improve liquidity and fund growth.
Its anthracite business has been developing well on the back of a robust ferrochrome market. Anthracite is blended together with coke for the production of ferrochrome.
“It’s quite a robust market on the back of ferrochrome production … and the outlook looks reasonable,” he said.
Sentula holds a 60% equity interest in the Nkomati anthracite mine, which Berry said is expected to produce 170,000 sales tonnes this financial year. The company said headline earnings for the six months to the end of September rose 10% to 10.6 cents per share.
Headline earnings are the main profit gauge in South Africa and strip out certain one-off, financial and non-trading items.
Revenue was up 3% to R1.22bn.
CIVIL ACTION JUDGEMENT
The group also announced it obtained a judgement to the amount of R88.5m plus costs against former director Casper Scharrighuisen in a civil action.
Sentula has been pursuing civil and criminal actions against individuals and entities implicated in fraud perpetrated during the 2008 financial year. The first civil action involving a claim of R133m commenced hearing on November 25 and a number of other civil actions will follow during the course of the 2012 financial year.
The criminal actions are being pursued by the prosecuting authorities, including the National Prosecuting Authority, it said.
