Martin Kadzere : Senior Business Reporter
ZIMBABWE Stock Exchange-listed coal miner Hwange Colliery Company has shortlisted potential partners to develop its new concessions in Lumbimbi and western areas. The new concessions, with an estimated underground resource of close to one billion tonnes, according to an independent competence report done by SRK Consulting, is expected to increase the life span of the coal mining firm by at least 50 years.Acting chairman Mr Jemester Chininga said last week the project would be implemented as a separate business unit to enable bankability. Mr Chininga said the process of identifying the technical and financial strategic partner was done through a public invitation for expression of interests in the exploration of the concessions.
“The adjudication would be finalised beginning the second quarter of 2016,” he said.
He said coal supply off take agreements were also concluded with two major new thermal power stations developers. Coal supply to the stations would be from new mines. While the company is working on the selection of the new partners, pre-exploration and development work at the three new concessions has commenced.
Hwange is facing serious financial problems, which has seen the company failing to pay workers.
Several creditors owed about $43 million by the company have since filed lawsuits against the coal miner, threatening the going concern of the business. The litigations cases include a court application by workers who are seeking to have the company placed under provisional judicial management.
The total value of litigations as at December 31, 2015 was $42,5 million; $21,2 million being value of cases for which judgment has been passed and $$21,2 million being value of cases pending judgments.
In total, Hwange’s total creditors for the year ended December 31 stood at $287,3 million.
“Hwange has been facing numerous litigations from creditors that threaten the going concern of the company,” said Hwange. “Debt instruments are being set up and once approved will stand as payment guarantee to creditors.”
The Reserve Bank of Zimbabwe intends to issue Treasury Bills to creditors to avoid the piling litigations.
Managing director Mr Thomas Makore said the central bank and the Finance and Economic Development Ministry was finalizing the issue. The creditors would be issued with TBs, which they can liquidate on maturity or use as security to borrow, at a discount.
During the full year to December 31, the company realised a $115 million loss from $38 million a year earlier after the Hwange factored in a $69,1 million Zimbabwe Revenue Authority liability covering six years. It had previously been disclosed as contingent liability.
An amount of $40,6 million had been accrued, resulting in an adjustment of $28,5 million after a verification exercise by Zimra.
Also contributing to the annual loss was a decline in production volumes to 1,55 million tonnes from 1,8 million tonnes on the backdrop of high fixed overheads as well as challenges experienced with the new equipment commissioned in June last year.
Revenue for the period declined to $67,6 million from $83,9 million due to low sales volumes, stagnant of thermal coal prices as well as decline of coal and coke prices.