Petmin sees 2% sales increase, 3% production decline in Q3

JOHANNESBURG (miningweekly.com) – Diversified miner Petmin on Friday reported that its production of metallurgical anthracite for the third quarter of the year decreased by 3% year-on-year to 342 536 t, from 352 179 t during the same period in 2015. However, sales volumes increased by 2% year-on-year to 363 982 t compared with 355 201 t during the same period in 2015.

The company attributed this sales increase to a strong demand for its anthracite products, produced at Petmin’s Somkhele anthracite mine, in KwaZulu-Natal.

Petmin further highlighted that energy coal production increased by 1% to 86 474 t for the third quarter from 86 032 t in 2015.

It noted that 55 920 t of energy coal were sold during the quarter, compared with 85 190 t sold during the third quarter of last year.

“Although sales for this product in the quarter were down, this was a timing issue related to planned export vessels and is not reflective of the continued strong demand for this product,” the company stated.

The multicommodity miner noted that, while sales volumes had improved in 2016, average export prices in rand terms for the period under review were about 18% lower than the average prices achieved in the year ended June 30. However, the average inland prices remained unchanged from the average prices achieved for the year.

Meanwhile, the company commented that at-mine-gate energy coal sales prices had increased by 1% in the third quarter from those achieved in the year ended June 30.

“Export prices have been extremely volatile since June 30. We expect export prices in rands to improve in the period to June 30, 2017, although the volatility of the markets makes it difficult to accurately forecast the rand prices in the period ahead,” Petmin stated.

The company further highlighted that sales commitments had been received for 1.16-million tons of an estimated 1.5-million tons of anthracite sales expected for the year ending June 30, 2017. “The remaining tons are under offer and confirmation of these sales is expected.”

Petmin noted that sales commitments had also been received for 400 000 t of an estimated 450 000 t of energy coal sales expected for the year ending June 30, 2017. The company noted that the balance of these tonnes were under offer and negotiations were expected to be concluded for all remaining tons.

The company also reported that, as at September 30, the group had R164-million cash on hand and available banking facilities of R330-million.

Meanwhile, Petmin pointed out that the recent rains in KwaZulu-Natal had provided “much-needed relief” and Somkhele’s water storage dams were now full. “We have sufficient process water for the foreseeable future,” the company added.

NORTH ATLANTIC IRON CORPORATION PROJECT UPDATE
During the third quarter, the Petmin board approved an additional $4-million investment to its North Atlantic Iron Corporation project, subject to various conditions. The company noted that the conditions had not been met and the additional investment had not been made as yet.

Petmin’s management has received a draft bankable feasibility study (BFS) which it said it was currently reviewing. The company noted that the BFS was expected to be updated and completed in the first quarter of 2017.