Wescoal shares jump on bumper sales, mine restart

WESCOAL’S shares surged by more than 13 percent on the JSE yesterday as the market welcomed the bumper sales volumes during the quarter to the end of June and the impending resuscitation of the Arnot mine.

“Arnot mine restart is imminent, with first coal expected during the 2021 calendar year.

“Both the Wescoal and Arnot OpCo management teams continue to work closely on ensuring that this target is met, including securing long-term coal off-take contracts for both domestic and export coal products,” said Wescoal.

It partnered with Innovators Resources to acquire the Arnot mine from Exxaro Resources in 2019.

Exxaro closed Arnot in 2015 after efforts to negotiate a new coal supply deal with Eskom failed.

Wescoal recorded a solid sales, production and trading performance during the quarter on a strong operational performance from the Moabsvelden mine in Delmas, Mpumalanga.

“Moabsvelden’s contribution to the group’s overall production and sales performance continues to increase as the box cut construction phase edges closer to completion. The project is, therefore, expected to significantly improve the group’s performance for the current financial year compared to the 2021 financial year,” said Wescoal.

Mining sales were 2.02 million tons, 32 percent higher than a year earlier and 24 percent higher than the 1.6 million tons recorded in the previous quarter on Moabsvelden’s own and buy-in sales.

Moabsvelden was acquired from Keaton Energy in 2017 and made its first coal delivery to Eskom in March. The mine was set to be a game-changer for Wescoal and expected to contribute 3million tons of coal a year towards the company’s output capacity, representing new growth opportunities.

Wescoal said although the June quarter’s sales tonnage was lower at the Vanggatfontein and Elandspruit mines compared to a year earlier, they were higher than the previous quarter’s sales.

Vanggatfontein’s sales were again lower than the comparable quarter because of lower sales from the common box cut.

The group said sales volumes from the Khanyisa mine were lower than in the comparable quarter and in the previous quarter.

Production was boosted by

Moabsvelden, but overall production was 2 percent lower than the comparable quarter because of significantly lower production at Vanggatfontein and Khanyisa.

Trading sales in the quarter under review were only 5 percent higher than in the previous quarter but 50 percent higher than in the comparable quarter because of the significant impact the lockdown had on sales volumes a year earlier.

“Performance for the first quarter of the 2022 financial year has therefore been encouraging,” said Wescoal.

Wescoal shares closed 14.17 percent higher at R1.45 on the JSE yesterday.