Hwange FY loss widens

JOHANNESBURG (miningweekly.com) – Triple-listed Hwange Colliery on Friday reported a widened loss of $115.1-million for the year ended December 31, compared with a loss of $37.9-million for the prior financial year.

This was attributed owing to the recognition of the $69.1-million Zimbabwe Revenue Authority (Zimra) liability covering the six-year period from 2009 to 2015.

An amount of $40.6-million had been accrued, resulting in an adjustment of $28.5- million after conclusion of the Zimra verification exercise.

Hwange’s turnover for the year was $67.6-million, lower than the restated turnover of $83.9-million achieved in the prior year.

Revenue was affected by low production and sales volumes and stagnant prices in both domestic and export markets.

During the financial year, operations had been streamlined and noncore costs rationalised.

Hwange noted that some of its creditors had taken legal action against the company and that efforts had been made to contain the negative effect of such action on the business.

A debt redemption plan and strategy was put in place, which would result in most of the creditors being paid through a debt instrument structured through the Reserve Bank of Zimbabwe.

Meanwhile, the company said it had a short-term recovery plan premised on a new business model aimed at resolving its viability challenges.

The $7.5-million coal prefinancing facility, structured through a major customer and syndicated by two local financial institutions, would give impetus to the new business plan and ensure attainment of the monthly production targets of 350 000 t/m from July onwards.

Mining contractor Mota Engil was expected to continue meeting its monthly tonnage target.

The production was matched to current market demand.

A focus on costs was expected to yield the desired margins given the decline in commodity prices.

Further, the company had started pre-exploration and development work at three new coal concessions that were awarded to it in July 2015.

The adjudication of technical and financial strategic partners for the concessions would be finalised at the beginning of the second quarter of this year.

The new concessions would be developed as a separate business unit to enable bankability and project financial and resource mobilisation.

Coal supply offtake agreements had also been concluded with two major new thermal power station developers.