Salungano Group returns to profitability as Moabsvelden Mine boosts performance

Salungano Group, the JSE-listed coal mining company significantly improved its solvency by the end of the six months to September 30 when headline earnings reached 21.56 cents a share compared with the 90 cents a share loss at the same time a year before.

"Salungano's performance…improved markedly...as the Moabsvelden mine's production increased by 9.7%. Whilst Moabsvelden contributed significantly towards the group's profitability, the Vanggatfontein Colliery was placed under care and maintenance," the board said in their results published Friday.

The company has been in breach of its loan facilities since June 2023, when it was unable to secure a refinancing agreement with its lenders. A standstill agreement has been concluded where lenders have agreed to stand still on their legal rights, provided the company complies with the repayment and other terms of the agreement.

The RCF (revolving credit facility) was settled on November 28, 2025, and the general banking facilities limit was R70m at the end of November 2023. As at September 30, 2025, the group's total assets exceeded its total liabilities by R93m.

"This is a significant improvement from the R4m solvency position as at 31 March 2023," the board said.

Also in progress were its financial statements for the year to March 31, 2025. The failure to timeously publish these had left the companyl in breach of JSE listing requirements. The company intended to publish these statements by the end of March 2024, the board said.

Meanwhile, in the interim period, sales volumes increased to 3.2 million tons through the six months from 2.1 million tons. Revenue increased 35.4% to R2.18 billion from R1.61bn. Gross profit more than doubled to R300m from R124m. Normalized earnings before interest tax depreciation and amortisation (EBITDA) came to R272m from a R81m loss at the same time last year.

The operating expense increased to R196m from R168m. Net asset value came to 23 cents a share from 37 cents a share at the same time last year. Interest bearing debt fell to R387m from R461m. No dividend was declared.

The group continued to operate with only the Moabsvelden Eskom contract, with the Vanggatfontein Colliery continuing to supply Eskom through rectification into the Neosho contract.

On October 20, 2023, Keaton Mining entered into a coal supply agreement with Eskom Holdings for the supply of coal from its Vanggatfontein Colliery.

The board said gross profit increased significantly through the interim period as a result of higher production and sales. The higher production volumes resulted in lower fixed cost per unit and the gross profit margin improved markedly to 13.8% from 7.7%.

"The increase is due to lower production costs and low coal buy-in costs resulting in lower cost of sale per ton," the board said.

For both operating profit and EBITDA, the comparative period was adjusted by R403m to remove the once-off profit on loss of control over Wescoal Mining, which occurred on August 24, 2024.

Finance costs amounted to R129m (R156m) which is the interest costs on the debt and the unwinding of the discount on rehabilitation obligations. The lower interest expense was a result of the reduction in the debt facilities.

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