The company is optimistic about its medium term growth prospects but sees cash flow challenges in the near term, its chief executive Don Turvey said in its annual report.

“Our financial performance has clearly been impacted by bearish sentiment in the global thermal coal market that has seen an almost 30% fall in coal prices during the year,” he said.

“The impact of this on our working capital has clearly been felt at a time when we have embarked on an aggressive growth strategy and committed significant amounts of capital to new projects that we believe will provide a strong platform for the future and generate positive returns for our shareholders in the medium term.”

While the company reported a 61% increase in sales revenues for the 2012 financial year to $82 million and a 286% increase in gross profit it reported a net loss of $50 million for the period.

“[This] clearly demonstrates the need for the group to remain focused and carefully manage its capital allocations during its growth focused strategy,” Turvey said.

The coming 2013 year brings with it a number of challenges and opportunities as the group looks to complete the acquisition of the outstanding minority interest in Mashala Resources and accelerate its joint venture with Korean Resources Corporation at the Vlakplaats coal project, he said.

The company is also seeking to ramp up its exploration in accordance with the Memorandum of Understanding with Total Coal SA for the Vaalbank coal project and to complete optimisation work on our De Wittekrans coal project ahead of an investment decision.

“We have embarked on a strategy to secure a strategic investor at the corporate or asset level, divest our non-core coal assets, and at the same time remain focused and committed on successfully settling the sale of our interest in the VanMag project,” Turvey said.