10th Mar 2014 09:29
LONDON (Alliance News) - Coal of Africa Ltd Monday said its pretax loss narrowed significantly in its first half as the company reduced costs as part of its ongoing turnaround strategy but it warned that it must achieve certain goals to pay its debts.
The thermal coal exploration and development company, which has projects in South Africa, said its pretax loss narrowed to USD25.0 million for the six months ended December 31, 2013, from USD44.8 million the previous year, despite an 88% fall in revenues to USD60,000 from USD516,000 in 2012.
The company said its revenues fell as coal prices declined and the company reduced its operations as part of its turnaround strategy.
Including the loss for the period from operations held for sale, including impairments at its loss-making Mooiplaats Colliery, the company's net loss narrowed to USD46.3 million from USD111.7 million in 2012.
However, Coal of Africa's cost of sales fell 92% to USD76,000 from USD898,000 the previous year, its employee benefits expense fell to USD4.1 million from USD7.5 million, and its other expenses fell to USD5.8 million from USD10.4 million.
The company also noted that its foreign exchange losses narrowed significantly to USD12.6 million from USD19.9 million as inter-group loan balances, borrowings and cash all benefited from falls in the South African rand against the Australian dollar during the period.
Coal of Africa said good progress had been made on all elements of its turnaround strategy. It said the placement of its loss-making Mooiplaats Colliery on care and maintenance, the commencement of a formal sales process for the colliery, and disposals of its Woestalleen Complex, Holfontein project and Bushveld investment are at various stages of completion and are all expected to be completed during the calendar year 2014.
The company is currently transitioning into a project development company, and it said that over the next three to twelve months, in order for the company to continue as a going concern and pay its debts, it must successfully conclude additional funding, settle a USD30.0 million ongoing liability with Rio Tinto PLC, and complete the sale of assets.
Coal of Africa shares were down 3.7% to 5.00 pence in early trading Monday.
By Tom McIvor; [email protected]; @TomMcIvor1
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