Hwange inks US$15m equipment finance deal
HWANGE Colliery Company Limited (HCCL) says it has entered into an capital financing deal from which it will receive equipment valued at US$15 million in the next two years.
However, the coal mining company did not disclose the identity of the partner in the deal.
Hwange in a statement accompanying its financial results HCCL said, “The company has entered into an equipment mobilisation agreement for the Underground Mine, that will result in the company getting new underground mining equipment valued in excess of US$15 million in the next two years.”
The recapitalisation programme will increase production to 50 000 tonnes per month in the second-half of 2022, 100 000 tonnes per month in the first-half of 2023 and a further 150 000 tonnes per month in the last quarter of year 2023.
Such increase in production would be welcome development to the company, which currently produces a total of 15 000 tonnes per month.
The miner also is investing in coking coal as it looks to increase the quantity and quality of its coking coal in order to export.
“In addition, open cast operations at the JKL pit will continue to be capacitated in order to increase high value coking coal in the product mix, the target being to increase production to 90 000 tonnes per month by end of 2022,” Hwange said.
The company said it had also engaged a new mining contractor to increase high value coking coal with a target production of 20 000 tonnes per month.
“The main thrust of Hwange in 2022 is to ensure that we fully capacitate our opencast and underground mine by addressing all bottlenecks currently affecting the mining process.”
The equipment mobilisation contract includes a washing plant that will be located near the mining areas, with the equipment to be commissioned during the second quarter of 2022.
The company believes this will reduce hauling and processing costs.
“The organisation will also go on a vigorous proactive maintenance drive to continue to stabilise the current washing capacity at both the HMS (heavy media separation) plant and the Jig and floatation plant,” the statement read.
The company has engaged a contractor to resuscitate beehive coke ovens to produce high value foundry coke with high demand in the export market. Production is targeted to commence during the first quarter of 2022, and will generate about US$3,4 million in 2022.
The company, which is still under administration had legacy debts of $904 million. The company posted a net profit of $28,6 million in the financial year 2021.
“Gross profit increased by 26 percent from $1,6 billion prior year to $2,1 billion in inflation adjusted terms this year. The company posted a net profit of $28,6 million during the year from $2,7 billion and the decrease was mostly attributed to exchange rate impact on legacy debts,” the administrator said.
In the period under review, revenue was up 31 percent to $9,4 billion from $7,2 billion in 2020, with 3 percent coming from sales in the southern Africa region.
Hwange attributed the rise in revenue to a combination of an increase in sales of high value coking coal and regular product price adjustments done during the year in line with market value.