Mining investment company Salungano Group has continued experiencing operational and financial challenges in the six months ended September 30, with the Elandsfontein Colliery not having produced coal since July 2023 and the Vanggatfontein Colliery operating below capacity.

The Khanyisa Colliery has also reached the end of its life-of-mine, leaving mostly the Neosho Trading business, which operates the Moabsvelden Colliery, to support the group’s profitability.

The group continues to operate with only one Eskom contract in place, with the Elandspruit and Vanggatfontein operations supplying Eskom through rectification into the Neosho contract.

Salungano reported revenue of R1.6-billion for the six months under review, compared with revenue of R2.3-billion for the same period last year.

Mining volumes decreased to 2.1-million tonnes, from 2.7-million tonnes in the prior comparable period.

Salungano posted gross profit of R124-million for the six months under review, compared with gross profit of R167-million in the prior comparable six months.

Its operating profit was R167-million, against a R16-million loss in the prior comparable six months, which includes a non-recurring accounting gain of R403-million. Without this transaction, which relates to the Wescoal Mining operation, the adjusted operating loss amounted to R236-million.

Normalised earnings before interest, taxes, depreciation and amortisation amounted to R81-million, while headline earnings per share widened from a loss of 19.64c in the prior half-year to a loss of 90c apiece in the reporting half-year.

Salungano managed to generate cash of R396-million, which is R262-million more cash than was generated in the prior comparable period.

The group’s finance costs amounted to R156-million in the reporting period, including high lending finance costs and the unwinding discount on provisions and other liabilities totalling R115-million. Overall, finance costs increased by 77% from R98-million in the prior comparable six months.

Salungano says it remains focused on navigating through its difficulties and stabilising the business in the second half of the financial year.