Vlakvarkfontein's year-to-date ROM coal production totaled 1.4Mt ROM coal in the 11 months to May 31, 16% above the budgeted ROM production for the period.
Based on these statistics, the company expects ROM production of about 1.55Mt for FY2013, which is 23% and 70% above ROM production of 1.24Mt and 0.89Mt achieved in FY2012 and FY2011 respectively.
Coal sales are also set to exceed those of last year, with 1.21Mt sold to date and total sales of 1.33Mt forecast for the financial year, around 5% higher than last year’s sales.
The South African mine reported $224 million rand ($US22.2m) of sales revenue for the 11 months ending May 31. And with total mine production and administration costs of R150m ($US14.9m), the operation has recorded a gross operating profit of R74m ($US7.3m) and a margin of 33%.
For FY2013, Vlakvarkfontein is now forecast to achieve record sales revenue of approximately R244m ($US24.2m) and a record gross operating profit of approximately R80m ($US7.9m).
Chief executive officer Don Turvey said the project, a true greenfield project development, had been a real success story for the company, with first production achieved 12 months after its acquisition.
Turvey said the project would enjoy free cash flow as it entered its fourth year in production.
“The operation has fully repaid all its capital development costs and is forecast to continue to generate free cashflow and dividends to its shareholders over the next seven years,” he added.
“To continue to report increased production and sales is very pleasing, and to be able to further report significantly increased earnings from the Vlakvarkfontein Coal Mine, demonstrates the value of our domestic thermal coal sales contracts with South African power utility Eskom, which ensures robust and secure margins even in the current environment of low export thermal coal prices and inflationary cost pressures.”
For the FY2014, Vlakvarkfontein is forecast to produce 1.32Mt ROM coal and achieve sales of 1.10Mt generating about R242m ($US24m) of total sales revenue, slightly lower than the FY2103 forecasts.
Vlakvarkfontein is a conventional open cast contract mining operation located about 90km east of Johannesburg. The mine is operated under a joint venture with Continental holding a 60% economic interest and having operating and management control.
About 1.2Mtpa of ROM production has taken place since June 2010 and with approximately 11Mt of JORC compliant reserves, the mine has a remaining mine life in excess of seven years.
