After the water use ban was lifted last October at its Vele coking coal (steelmaking) colliery, Coal of Africa (CoA) has made significant progress. It has started extracting coal – 16,800 tonnes by the end of February – and sales are expected to start by the mid-year. And while the shares aren't cheaply rated, the group's coking coal prospects suggest plenty of long-term upside.
Indeed, and while CoA already has two thermal coal (power generation) mines, it's the production of higher value coking coal that's of greatest interest. And, away from Vele, the definitive feasibility study for a second coking coal mine, Makhado, has been completed. Output is currently being sampled and discussions in progress to convert the letter of intent with steelmaker Arcelor Mittal into a sales agreement. Meanwhile, Woestalleen produced 0.82m tonnes (mt) of export quality thermal coal in the period and a further 0.33mt of lower grade product for Eskom, the South African power utility. Meanwhile, the Mooiplaats colliery yielded 0.36mt of export quality thermal coal and 0.07mt of Eskom-grade coal.
Of the reported loss, $42.6m (£27.3m) relates to unrealised non-cash foreign-exchange losses arising from the translation of intra-group balances. Investec Securities expects full-year adjusted EPS of 6.8¢.
| COAL OF AFRICA (CZA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 69p | MARKET VALUE: | £455m | |
| TOUCH: | 68-69p | 12-MONTH HIGH: | 93p | LOW: 43p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 67¢ | NET CASH: | $44.9m | |
| Half-year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 88.3 | -68.9 | -12.3 | nil |
| 2011 | 144 | -78.5 | -13.4 | nil |
| % change | +63 | – | – | – |
£1=$1.562 | ||||
