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Senior Business Reporter
HWANGE Colliery Company Limited (HCCL) targets to increase coal output to 350,000 tonnes per month starting in July, acting board chairperson, Jemester Chininga, has said. At present, the colliery’s monthly output stands at 200,000 tonnes. In a statement accompanying HCCL financial results for the year ended December 31, 2015, Chininga said increased output was premised on the $7.5 million coal-pre-financing facility secured locally.
“The short term recovery plan premised on a new business model will address the viability challenges of the company.
“The $7.5 million coal-pre-financing facility structured through a major customer and syndicated by two local financial institutions will give impetus to the new business plan and ensure attainment of the monthly production targets of 350,000 tonnes per month from July 2016 onwards,” he said.
HCCL mining contractor Mota Engil, Chininga said, is expected to continue meeting its monthly tonnage target. “The production is matched to current market demand. The cost focus approach will yield the desired margins given the decline in commodity prices,” he said.
During the period under review, HCCL’s turnover of $67.6 million was comparably lower than the restated turnover of $83.9 million achieved in the previous year.
Revenue was affected by low production sales and sales volumes, as well as the stagnant Hwange Power Station (HPS) coal prices and the decline in coal and coke prices locally and export markets. The colliery incurred a gross loss of $33.8 million compared to a gross loss of $9 million for the 2014 financial year.
“The loss for the year ended December 31, 2015 was $115.1 million compared to $37.9 million recorded for the same period in 2014. The widening of the loss is mainly attributed to the recognition of the $69.1 million Zimbabwe Revenue Authority liability covering the six-year period 2009 to 2015.
“An amount of $40.6 million had been accrued resulting in an adjustment of $28.5 million after conclusion of the Zimra verification exercise,” he said. Chininga added that conversion of the Zimra debt into equity is in progress and the exercise should be completed by the end of the second quarter.
“This transaction is structured through a fully underwritten rights issue that’ll be brought before the shareholders for approval in April (this month).”
He said HCCL has also commenced pre-exploration and development work at the three new coal concessions that it secured in July last year. It is hoped that the new concessions would be developed as a separate business unit to enable bankability and project financial and resource mobilisation.
The company’s total assets during the period under review decreased from $247.8 million as at the previous year to $239.1 million.
“The company’s statement of financial position was eroded by the accumulated losses and the Zimra liability. Current liabilities amounted to $287.3 million compared to $209.8 million as at the comparative period last year. Some of the creditors have taken legal action against the company.
“Efforts have been made to contain the negative effect of such action on the business. A debt redemption plan and strategy has now been put in place which would result in most of the creditors being paid through a debt instrument structured through the Central bank,” he said.
Online Reporter
Bongani Ndlovu