JOHANNESBURG (miningweekly.com) – JSE- and Aim-listed anthracite- and silica-miner Petmin said on Monday it had R180-million in cash and another R150-million in unused bank facilities.
Petmin COO Bradley Doig told Mining Weekly Online that the company intended using its cash prudently.
Doig said that Petmin was currently in the midst of an acquisition negotiation, and would more likely preserve its cash and raise equity to fund the deal.
“We’re going to be very careful about how we structure the finances for the acquisition. Our major currency is our paper and, if we can, we’d would probably prefer to use our paper than our cash,” he said.
But, that would depend on the outcome of the negotiations, which were likely to be concluded in a couple of months.
Doig said that Petmin had disposed of its Springlake colliery to Shanduka Coal and was currently in a position to allocate its best people to the higher-quality anthracite deposit at Somkhele.
Initially, Petmin intended selling Springlake for R145-million, but that price was reduced to R85-million in line with market conditions.
As market conditions improved, Petmin would review its plans for a new plant, which would double its production capacity of 750 000 t/y of saleable material.
“All the preparatory work for the new plant has been done, but we won’t simply go in and hope for the best on the spot market. We’ll back the development with some long-term, properly structured offtake agreements,” Doig added.
Petmin had no exposure to rail as anthracite was railed the 80 km from Somkhele to the dry-bulk terminal at Richards Bay.
In normal market conditions, 60% of its production was exported and 40% sold domestically.
He said that discussions were continuing with Transnet Port Terminals on the possibility of obtaining increased future port allocation.
Petmin’s headline earnings for the year ended June 30 were expected to be more than 20c a share, up from the 15,31c a share of last year, an increase of more than 30%.
© 2009 Petmin Limited