Keaton Energy H1 dil HEPS 3.4 cents vs 1.3 cents
November 26, 2009
Coal exploration and development company Keaton Energy on Thursday reported diluted headline earnings per share of 3.4 cents for the six months ended September 2009 from 1.3 cents a year ago.
The company reported income for the period attributable to owners of the company of R3.883 million from R1.90 million before.
The company said indicating continued progress towards its target of producing 2 million tons per annum of saleable coal, the board has authorised development of the first phase of the group's first major project - Vanggatfontein project - previously known as the Delmas project - for which regulatory approvals were received during the period under review.
The group's total cash position at end 30 September 2009 amounted to R366 million.
A further amount of R8 million was invested in coal stockpiles at the Klip Colliery, which were sold after the reporting period.
Keaton said the safety performance has been acceptable. Some 25 374 hours were worked on-site with no lost time injuries recorded.
The group has not had any material health or environmental issues.
During the period activities were focused on the Vanggatfontein project.
The culmination of two and a half years of exploration and regulatory effort saw a mining right granted in June 2009 for the overall project.
The development plan for the project will be phased to take into account market conditions and commercial negotiations.
For phase 1, the board has approved the development of the indicated capital cost project.
This phase, comprising 3.4 million tons of 5 Seam metallurgical coal and a 50 000 tons per month processing plant, is planned to produce 30 000 tons per month to take advantage of premium pricing in the domestic market, a consequence of the recent return to service of smelters by local ferro-alloy producers in response to an anticipated upturn in international demand.
The second phase of the project will produce thermal coal and is thus dependent on the receipt of a suitable off-take agreement from Eskom.
Keaton responded to Eskom's recent request for proposals process to supply domestic power station coal and awaits the power utility's response.
Further phases may follow, particularly if markets improve for the significant resource of mid- and low-volatile coal on the property, it said.
Operations at the Klip Colliery have been downscaled and will be curtailed prior to the end of the first quarter, 2010, when this small mine will be worked out.
The mine site will be rehabilitated in the next reporting period. Subsequent to the default by the life of mine coal off-taker, it has been difficult to find a buyer for the remaining production of the mine at the prices contracted originally, against the backdrop of reduced demand in the domestic market for run-of-mine unwashed coal.
The remaining ROM coal has been sold however.
The first phase of the Sterkfontein extension drilling programme is well advanced on properties contiguous to the east of the 17.3 million ton South Block resource.
Coal has been intersected in all 14 holes drilled thus far, and encouragingly the thickness has generally exceeded the expected thickness predicted by the geological model.
No coal quality data has yet been received and a further 17 holes remain to be drilled prior to the completion of an updated SAMREC compliant resource statement, targeted for release at the end of the first quarter of 2010.
The Sterkfontein extension prospecting right, acquired in early in 2009, is held by Keaton Energy's 74 percent held subsidiary Labohlano Trading 46 (Pty) Limited.
At the Leeuwfontein project, all preparatory work has been completed in order to submit a mining right application.
Subject to a final review of alternatives for the project, particularly as they relate to neighbouring properties, the mining right application will be submitted.
The Braamspruit project continues to be the subject of a legal dispute with Anglo Coal, and although some progress was made in the period, a final settlement has not been agreed.
Looking ahead, Keaton said the development of the Vanggatfontein 5 Seam project will be the priority in the next six months.
During this time it is also expected that a decision will be made on the development of the Vanggatfontein East Pit (thermal coal) project. This will be subject to the successful conclusion of an off-take agreement.
In addition, the board is confident that the group's Sterkfontein project will be developed into a major new mine as market conditions improve. - I-Net Bridge
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