Assistance from JSW Energy Ltd has resulted in mining company South African Coal Mining Holdings (SACMH) reporting a loss of 10.2 million rand, much lower than the R31.1 million reported previously.
But the future of the business will be heavily dependent on continued support from JSW, which holds a controlling interest in the company, SACMH said in its annual report.
The suspension of SACMH’s shares on the JSE in May 2009 for its failure to provide provisional reports was lifted last Friday by the Johannesburg Securities Exchange (JSE).
Following the investment in the group by JSW and the financial support received, mining operations were resumed at the Umlabu Colliery with effect from the beginning of October last year with a capital investment of R13.1 million.
“Operations remain at an early stage with additional plant being commissioned during the last quarter of the financial year,” the company said.
The existing wash plant is being upgraded at an estimated cost of R18.9 million, which will increase the capacity to 200 tonnes per hour. The plant is expected to be fully commissioned by May 2011. Funding will be provided by JSW.
Auditors Deloitte & Touche, without qualifying their report, reported an “emphasis of matter” that highlights that the group’s going concern is dependent on JSW Energy Ltd, (a company listed on the Mumbai Stock Exchange) and operating through its subsidiary JSW Natural Resources South Africa (Proprietary) Ltd.
JSW has confirmed its firm intention to continue the company’s financial support to South African Coal Mining Holdings.
About $19 million was advanced to the group by JSW to fund the start-up of operations. This loan is repayable after seven years and bears interest at 2.75 per cent above the monthly USD LIBOR rate. The loan has also been sub-ordinated by JSW in favour of The Standard Bank of South Africa Ltd.
Over and above the R18.9-million committed for the upgrade of the wash plant, a further R13.9 million has been authorised. Funding of the expenditure will be made available by JSW.