Increased production to spur Hwange

from increased industrial production and its forays into regional and overseas markets.
This should translate to growth in its production and sales, which generated US$98,9 million in the financial period ended December 31 last year.
Notwithstanding production constraints, opportunities at their disposal should translate into revenues of about US$145 million and a bottom line of US$13,2 million for the full year to December this year.
The group’s market capitalisation stands at US$129,3 million and is focused to close the current financial year around US$140 million – which at the current price of US$0,71 suggests that the company’s share is fully valued.
Analysts believe that earnings before interest tax, depreciation and amortisation and profit after tax can rise to US$500 million and US$110 million respectively for the full financial year if production increases to the management forecast of 4,2 million tonnes per annum.
Given the fact that the company still needs to recapitalise, it is going to take it about three years to raise its market capitalisation to US$750 million.
Last year, Hwange turned over US$98,9 million, representing a 49 percent increase compared to the same period last year.
Operating on 34 percent general profit margins the group achieved US$33,4 million gross profit.
Operating profit came in at US$9,4 million after the company accounted for US$26 million in administrative expenses and other income of US$3,2 million.
Attributable profit for the year stood at US$6,3 million (3,4c basic earnings per share).
The company’s balance sheet stood at US$170 million with US$58,8 million being the net asset value and cash equivalent at US$647 420.
During the period under review, Hwange recorded a 47 percent increase in production and sales to 2,5 million tonnes of coal and coal products.
Management attributed the low income to the drop in coal and coke prices in the latter part of the year.
Domestic demand was driven by Zesa which required coal for power generation as other industries remained subdued. However, management believe the envisaged economic growth would bring with it stronger demand in the other sectors.
Over the year under review production was boosted by the procurement of mining equipment on a short- term funding facility that the colliery managed to secure.
The company would be focusing on new regional and overseas markets to boost export sales.
It is also expecting delivery of additional machinery and equipment before the end of the second quarter this year.
The machinery was acquired using a medium-term financing facility, which should boost productivity and help meet the anticipated firm demand in the second half of the year.
HCC supports various industries that include power generation, agriculture, ferrochrome, steel and allied industries, cement production, brick making and manufacturing, all of which are expected to register various levels of increases in productivity and growth this year and with it increased demand for Hwange’s products.
The coal miner’s core activities include exploration, mineral processing and distribution of coal, as well as of the production of coke and related by-products in Southern Africa.
These are achieved through open cast mining, underground mining, coal processing and coking plant, exploration, technical and engineering services.
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