Anthracite and silica miner Petmin is looking for opportunities to buy mid-sized, quality coal and industrial minerals companies which may be under stress , CEO Jan du Preez said yesterday.
The company held R75,3m in cash at the end of December and is due to receive about R150m in the next few months on the completion of its sale of the Springlake Colliery to Shanduka. It also has R120m in undrawn banking facilities.
Petmin generated R165,1m in cash from operating activities in the six months to December compared with R56,3m in the same period in 2007.
In the past six months, Petmin’s capital spending was R170m and it planned to spend another R30m in this six months on opening up new areas at the Somkhele mine. At the company’s Veremo pig iron project, where it held a 25% stake but managed the operation, test work was still ongoing and it planned to complete a bankable feasibility study within the next 12-18 months, Du Preez said. But the mine was unlikely to come into production before 2012.
Du Preez said Petmin would continue with its share buyback programme, which was more tax-effective for its shareholders than paying dividends. Management believed it could generate better returns by making careful acquisitions rather than paying out dividends.
Chief operating officer Bradley Doig said Petmin’s focus was on bulk commodities and it had no interest in precious metals or diamonds companies. It was interested in companies that were at, or close to, production, preferably generating pretax profits of at least R50m a year .
Petmin grew revenue to R490,3m in the six-month period from R318,6m and headline earnings rose 81% to 11,82c a share.
The anthracite division increased sales 14% to 682879 tons. All export sales were contracted at $62,50/ton, which was lower than the market price but provided a guaranteed offtake and reduced risk, Doig said.
Another 145000 tons will be sold at $118/ton in the six months to June, which is significantly above spot prices, and a three-year export sales contract has been signed for 1-million tons over three years to 2011 at an average of $119/ton .
© 2009 Petmin Limited