Keaton expects FY loss as a result of one-off costs

JOHANNESBURG (miningweekly.com) – A R159.2-million impairment charge and a R61.5-million breach of contract charge will see Keaton Energy post a headline loss a share for continuing operations of between 16c and 17c for the year ended March 31, compared with headline earnings per share (HEPS) of 12.5c in the prior financial year.

Keaton further expected to report a basic loss a share for continuing operations of between 61.7c and 62.7c, compared with basic earnings a share of 12.6c the year before.

The headline loss a share for continuing and discontinued operations was expected to be between 26.4c and 27.4c, compared with HEPS of 0.4c the year before, while the loss a share for continuing and discontinued operations was expected to be between 99.2c and 100.2c, compared with a loss a share of 13.8c in the prior year.

The R159.2-million one-off impairment charge was related to the Leeuw Braakfontein Colliery project, while Keaton had also incurred a one-off R61.5-million financial liability owing to a breach of contract with trading partner Gunvor Group.

Keaton had entered into a pre-offtake finance arrangement with Gunvor for the supply of 600 000 t of coal to be delivered from the group’s Moabsvelden project, in Delmas, over a 22-month period from January 2015 to October 2016 in return for a prepayment of $4-million.

Keaton was expected to deliver the first coal to Gunvor by December 31, last year, but was unable to do so owing to delays in the awarding of an integrated water use licence (IWUL) by the Department of Water and Sanitation for the Moabsvelden project.

The coal company had applied for the IWUL in 2014 when it acquired the project through the acquisition of Xceed Resources.

Keaton would publish its results on June 27.