15th Mar 2018 15:00
LONDON (Alliance News) - MC Mining Ltd said Thursday losses widened significantly in the first half of its financial year due to substantial impairment costs from the Vele coking and thermal coal colliery, which is in the early operational and development stage.
During the second half of 2017, the pretax loss widened to USD93.1 million from USD13.0 million the year before whilst the impairment costs of the Vele assets reached USD87.5 million. The Vele coking and thermal coal colliery remained on care and maintenance.
The company recorded revenue, however from Uitkomst, a high grade thermal colliery, of USD17.0 million for the period and cost of sales of USD14.4 million contributing to a gross profit of USD2.7 million.
MC Mining, formerly known as Coal of Africa Ltd, said that during the second half year, the group decided to prioritise the Makhado Project, a coking and thermal coal exploration and evaluation project, and delay the redevelopment of the Vele Colliery.
"The recent political developments in South Africa have resulted in a much stronger currency, particularly against the United States dollar. The change in economic climate together with the company prioritising the development of the Makhado Project, resulted a USD87.5 million impairment in its investment in Vele and the positioning of the colliery within MC Mining's portfolio will be finalised before the end of the current financial year," Chief Executive Officer David Brown said.
The company reported that the underground Mooiplaats Colliery, which had been on care and maintenance since 2013, was sold to Mooiplaats Coal Holdings Proprietary Ltd for USD12.9 million to fund the Makhado Project.
"The Mooiplaats disposal will yield annual operational cost savings of approximately USD1.4 million while the aggregate proceeds of USD14.5 million will be used to further develop our flagship Makhado Project and/or the potential acquisition of a second cash generating asset," Brown said.
Shares in MC Mining were 3.7% down at a price of 38.05 pence on Thursday afternoon.
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