Keaton Energy earnings soar 145%

2012-05-30 15:03

Johannesburg - Coal development and exploration company Keaton Energy Holdings [JSE:KEH] reported substantially higher revenue of R474m from R35m the previous year and a 145% increase in HEPS to 25.2 cents.

The group's preliminary audited results released on Wednesday said that in its fifth year of existence the company had firmly established the platform to comfortably exceed its stated target of 2Mt production a year.

In the 2012 financial year the group produced and sold a total of 1.2Mt (million tonnes) of coal reflecting both the continued production build-up at Vanggatfontein and the inclusion of production from Leeuw Mining and Exploration's Vaalkrantz.

Revenue of R474.3m which included R78m in transport revenues of Eskom coal was substantially higher than the previous year?s R35.1m.

Cost of sales increased to R408.1m.

After accounting for mining and related expenses of R10.3m and other expenses and income operating profit for the year was R56.6m. A gain of R114.3m reflecting the Leeuw Mining and Exploration acquisition boosted operating profit before income and costs to R170.9m.

Profit for the year after taxation of R8.2m was R149.3m compared with R7.1m in the previous year.

Headline earnings per share (HEPS) increased by 145% to 25.2 cents earnings per share (EPS) by 783% to 90.9 cents and net asset value per share by 31% to R4.45.

These improvements reflect substantial production and sales increases from 56 000 tonnes to 1.2Mt the company said.

This had been attained through greenfields exploration and development and through acquisition.

Landmark achievements were the exploration development and start of production at the Vanggatfontein Colliery in the Mpumalanga province and the acquisition of a controlling interest in Leeuw Mining and Exploration.

At Vanggatfonfontein the total run of mine production increased to 2.1Mt from 137 000 tonnes reflecting the on-going production build-up during the year.

Keaton Energy managing director Paul Miller said work continued apace to increase saleable production of four and two seam coal from the 145 000 tonnes per month attained in the period under review to the planned 175 000 tonnes per month.

A key focus in respect of the latter involved turning around Leeuw Mining and Exploration's under-performing Vaalkrantz Colliery in KwaZulu-Natal.

At Vaalkrantz where Keaton Energy took effective control from mid-December 2011 total run of mine production almost doubled to 560 000 tonnes with total saleable production up by 94% to 351 000 tonnes for the full 12 months.

Contributing factors to this turnaround Miller said included Keaton Energy's early 2011 refinancing of Leeuw Mining and Exploration which meant existing capital equipment could be refurbished and new equipment bought and development of the West Adit could be completed and new management appointments as well as the moving in-house of certain previously out-sourced functions.

Miller said the group had comfortably exceeded its mid-term production target of 2Mt per year having established a production platform of 2.7Mt per year across its two operations.

"Our strategy now is to attain 5Mt a year mid-tier producer status. We have a track-record of success in terms of greenfields exploration and development on which to advance our future projects and prospects and we have also demonstrated our ability to identify distressed assets and turn these to account."

"Stakeholders can expect Keaton Energy to vigorously pursue both avenues of growth in the years ahead" Miller concluded.

Publication of the integrated report will be in June.