05/03/2024
๐๐ข๐ฉ๐๐ฅ๐ก๐ ๐๐ก๐ง ๐๐๐๐๐ฆ ๐ข๐จ๐ง ๐ ๐๐ก๐๐ฅ๐๐ฌ ๐ช๐๐ง๐ ๐ฃ๐ฏ๐ด๐ต ๐ ๐๐๐๐๐ข๐ก
- Separation with old contractor Jarcon completed
- New Mining contractor , citizen owned Meropa already on site
- Mining resumed in February
๐ง๐ต๐ฒ ๐ฃ๐ฟ๐ผ๐ท๐ฒ๐ฐ๐๐ | ๐๐ผ๐ฎ๐น ๐ ๐ถ๐ป๐ถ๐ป๐ด
State owned mining investor Minerals Development Company Botswana ( MDCB) has come forth for the cashflow challenged BSE listed Minergy Limited with recapilisation amounting to P389 million.
Minergy which is one of the local mining assets in MDCB investment portfolio revealed this in an upate to the market today.
The company which operates Masama Coal Mine in Medie has been expericening cashflow issues since covid due to plummeting coal prices, logistics challenges , slow performance of coal in the commodities markets amongst others.
In the six month trading period ended December 2022, Minergy reported net loss before tax of P58 million.
In a cautinary statement to the market this morning , the Board of Minergy advised shareholders that the net loss before tax for this reporting period will be between 51% and 71% higher than the previous interim period.
This equates to an additional net loss before tax of between P25 million and P45 million for the interim period ended 31 December 2022.
Minergy faced operational disruptions during the interim period, which had a negative impact on its sales.
The primary reason for these disruptions was the suspension of operations by its previous mining contractor, Jarcon Opencast Mining , due to trade payable arrears in March 2023.
Minergy explained that although this suspension occurred in the last quarter of the 2022/23 financial year, it had a lasting impact on the companyโs sales, extending into the interim period.
This, together with depressed coal prices (both offshore and inland) and an increase in inland inventories attributable to logistical challenges in South Africa, conspired to a very challenging trading environment.
In August 2023, Minergy received BWP90 million in funding from its main funder, Minerals Development Company Botswana (MDCB) , a 100 % government owed investment entity under the Ministry of Minerals & Energy.
Mr Morne du Plessis resigned as CEO, culminating with the appointment of Mr Matthews Bagopi from MDCB as the Acting CEO of Minergy Coal (Pty) Ltd.
This funding was the first phase of funding in a strategic turnaround plan aimed at changing the businessโs fortunes.
A strategic decision was taken in September 2023 to replace its mining contractor with a new mining contract and contractor that would enable the new strategic route for the business.
The transition of contractors resulted in no production in the second quarter of the interim period, with sales derived from existing product inventory.
The second phase of the strategic turnaround involves additional funding of BWP299 million from MDCB which was received by Minergy on 29 December 2023.
This brought to finality the relationship with the old contractor and paved the way for the new contractor to establish and resume production and some provisional and short-term working capital.
The new mining contractor, Meropa Resources owned by a consotium of Batswana is now on the ground resuming production, following Minergy Coalโs procurement processes.
Meropa mobilised to the site from 3 January 2024, allowing Minergy to resume mining activities in February 2024, full-scale mobilisation is expected by the end of February 2024 and full-scale production and sales by the end of June 2024.
The second strategic turnaround phase gives way to the following phase of operational stabilisation and continuous business improvement as a low-cost quartile producer.
The scope of this phase ranges from the coal resource, extraction and processing, development of logistical solutions and linkages into the marketplace, all these entrenching efficiency, productivity and sustainability.
๐ทMinergy
