By Thomas Chidamba, ZiMining Editor
Every cloud has a silver lining as the judicial managedHwange Colliery Company Limited (HCCL) realised a ZW$34 million profit for its half year financial operations,defying a financial crisis exacerbated by debts and obsolete equipment.
According to the unaudited financial results for the half year ended 30 June 2019, HCCL’s revenue increased by 128% from ZW$39.5 million for the six months ended 30 June 2018, to ZW$69.8 million for the period under review.
The company’s appointedjudicialadministrator,Bekitemba Moyo said that production increased from 344, 694 tonnes to 394, 407 tonnes during the period under review.
“The contract miner stopped mining on or about 15 December 2018 and only resumed mining in August 2019. In addition , the company only resumed open cast mining in March2019. Owing to the above, production declined by 52% from 819,859 to 394,704 for the period under review.
” It is interesting to note that HCCL production increased marginally from 344,694 tonnes to 394,704 tonnes and it has continued to increase for the first three months of the second half from 158 981 tonnes to 224 191 tonnes.
“Total sakes tonnage declined by 16% from 682 152 in 2018 to 573 238 during the period under review. The sales mix however improved with HCC/HIC coal sakes increasing by 4.2% from 268 570 tonnes to 279 790 tonnes. HPS sakes to Hwange Power Station decreased by 38% from 376,695 tonnes to 232,222 tonnes.
“The cost of sakes increased by 16% to $35.7 million from $30.6 million for the prior year comparative period. As a result, the company posted a gross profit of ZWL$34 million compared to a gross loss of ZWL$1444,000 in prior year,” said Moyo.
The administrator said the proposed arrangement with creditors to restructure short term debt to long term debt was overtaken by events but the company is still committed to settle its arrears.
“In May 2017, HCCL entered into a scheme of arrangement with its creditors in terms of Section 191(2) of the Companies Act (Chapter 24:03) (” the Scheme”) to restructure short term debt into long term debt.
“While the proposed scheme was sound, and long term debt is a necessary mechanism to liquidate the Company’s debts, the Scheme itself was not successful, as a number of the objectives were not met, and ultimately, the Company lacked capacity to fund the collection Account to settle interest due to creditors. The Scheme was therefore overtaken by the placement of the Company under administration.
” The administrator recognises the obligation of the company under the Scheme, including but not limited to, debentures, proposed payments to employees and other creditors. These will be incorporated into the administrator’s proposed scheme of reconstruction, as modified where necessary, to comply with the Reconstruction Act,” explained Moyo.
Moyo said the company targets an increased production in the second half of the year.
“The company should be able to comfortably produce 250,000 tonnes per month inclusive of the mining contractors’ contribution. Further, the company has deliberately decided to mine the JKL Pit and underground which will result in the production of high value coking coal. Going forward, the plan is to invest in a coke oven battery with beneficiation in mind and this should result in a significant increase in revenues. the company continues to explore pillar mining which if successful, should result in production volumes being north of 300,000 tonnes.
” The Company’s open cast operation contributed 195,173 tonnes for the half year which represents 69% of the total half year production. There are still constraints in the internal logistics and processing section of the value chain. Efforts continue to be made to stabilise the operation for it to be able to consistently produce 120 000 tonnes per month.
“The Company is working on stabilising the underground mine operations which averaged 21,000 tonnes per month for the period under review. The target is to bring the operation to 50,000 tonnes per month, which will contribute significantly to the company’s bottom line and enhance exports.
” The company made some significant efforts to stabilise the Jig and Floatation plant during the first half of the year. The plan for the 2nd half is to resuscitate the HMS plant so as to increase the washing capacity.” email@example.com