Buffalo Coal production slides as tough conditions continue

JOHANNESBURG (miningweekly.com) – Total run-of-mine production at JSE- and TSX-V-listed Buffalo Coal’s operations fell 20.4% year-on-year, to 416 000 t, in the second quarter ended June 30, owing to difficult mining conditions and pitroom constraints at its Magdalena project.

The mine saw a 27.9% decrease in Magdalena underground production, from 401 000 t in the second quarter of 2015 to 289 000 t in the quarter under review. This was partially offset by production from Aviemore increasing 4.3% to 126 000 t, performing in line with historic and budgeted performance levels.

The beleaguered miner further reported saleable coal production of 249 000 t for the quarter under review, compared with 281 000 t in the second quarter of 2015, while saleable calcine product fell 26.5%, primarily as a result of market demand.

Bituminous coal and anthracite sales reached 229 000 t in the second quarter, compared with the 277 000 t sold in the prior comparable period.

Despite a weak domestic anthracite market, which is expected to remain depressed throughout the year, anthracite sales stood at 84 000 t, of which 77.7% were export sales and 22.3% were domestic sales.

This was higher than the 61 000 t sold in the prior comparable period, mainly as a result of the conclusion of an anthracite blend contract with an export customer.

Bituminous sales reached 145 000 t in the quarter, of which 59.4% were export sales and 40.6% were domestic sales.

This was 33% lower than the 216 000 t sold in the second quarter of 2015, but in line with a decrease in bituminous production, as well as a result of a constraint with regards to the availability of trains for the export market.

SARS ISSUE
Meanwhile, the company said that its 100%-owned subsidiary Buffalo Coal Dundee received a letter of demand from the South African Revenue Service (Sars) during the second quarter regarding an investigation conducted on diesel refunds claimed.

The Sars Commissioner disallowed diesel refunds in the amount of R13.8-million for the period December 2012 to February this year, with the company planning to dispute the disallowance.