Coal mining and trading company Minergy says its new strategic and operational drive towards business improvement has paid off in the financial year ended June 30, with the company experiencing operational stabilisation and a successful turnaround.

Minergy resumed mining at its Masama coal mine, in Botswana, in February, which has already achieved coal production efficiencies and cost efficiencies.

Among the milestones in the company’s strategic turnaround was terminating the contract with the previous contract mining company, which, compounded by financial challenges in the 2023/24 financial year, led to the stoppage of mining activities at Masama.

The company recorded six months of lost revenue; however, the onboarding of its new mining contractor Meropa Resources has been successful.

Meropa Resources is a consortium of local and citizen-owned mining companies, not only successfully resuming operations at Masama coal mine but also changing the landscape of contract mining in the country, diversifying an environment largely dominated by large multinational contract mining companies.

Minergy has not been able to achieve steady-state production as planned in June, owing to slower-than-expected market offtake, however, the production capability to ramp up to steady-state production is now in place. Minergy expects to reach steady-state capacity in November.

Acting CEO Matthews Bagopi says its marketing and sales activities are gaining momentum, with customer requests coming in and offtakes having started in May. “The resumption of mining has not only regained our customers but has opened up new markets and supply routes,” he explains.

Minergy is discussing long-term offtake agreements with customers in the regional power sector, as well as with project developers that are considering the use of unwashed coal products.

The company is also benefitting from global coal prices trending above $85/t, with globally traded coal prices having surged to $117/t on August 14. Bagopi says this reflects a robust resurgence in the market and increased confidence in offshore exports.

Overall, Bagopi says Minergy is poised to take advantage of market developments, which, coupled with the company’s lean and efficient production, offers a solid foundation for growth and profitability in coming months.

Minergy is working towards unveiling its long-term resource development plan for the life of the mine and a five-year corporate strategy for 2025 to 2029, which will be shored up by a new business operating model designed to deliver strategic goals contained in the company’s medium- and long-term plans.

On the environmental front, Minergy is working with Meropa to explore environment-friendly chemical dust suppression technology along the road to Lentsweletau to address community concerns related to truck traffic dust.

Bagopi explains that this is an interim solution while plans for upgrading the mine access road are being finalised.

FINANCIAL PERFORMANCE

In line with the stoppage of mining at Masama in the reporting year, Minergy’s revenue decreased by 81% year-on-year to P97-million, owing to minimal coal sales.

The company’s cost of sales decreased by 64% year-on-year to P202-million, in line with the lower sales.

The continued fixed costs, in the face of lower revenue, put a strain on the company’s cash flow, which necessitated further borrowing to enable the business turnaround.

Finance costs, therefore, increased by 37% year-on-year to P169-million, driven by the highly leveraged capital structure and additional debt incurred.

The company’s total comprehensive loss for the year amounts to P187-million, or 40.10 a share, while its total liabilities were P1.3-billion.

Minergy had P2.3-million of cash on hand at the end of June.