Petmin sees economic downturn impacting on silica, anthracite units

JSE- and Aim-listed minerals, mining and processing company Petmin on Monday, said that it expected the economic downturn to impact on the sales of its silica and anthracite divisions.

Reporting on its results for the six months ended December 31, 2008, the company said that the period under review had not reflected the full impact of the economic crisis, which had impacted on the metallurgical sector.

Petmin’s net profit for the six months had declined by 13% to R81,1-million, compared with R93,2-million the year before, while diluted earnings a share were down to 14,72c a share, compared with 18,89c a share for the six months ended December 2007.

Revenues had increased by 54% to R490-million, compared with R319-million the year before, while operating profits were up 69% to R115-million, compared with R68-million the year before.

The increase in revenue and operating profit was attributed to strong performances from all the operations, Petmin said in a statement to shareholders.

Production and sales of silica and chert at the SamQuarz silica mine had increased in the six months. Production was up by 33% to 815 235 t, while sales had increased by 43% to 902 513 t.

The company expected the mine to maintain its current production in the six months ahead, as the crusher-run material was used in the construction of maintenance and roads.

However, Petmin stated that it expected the mine’s sales volumes to be slightly lower in the six months ahead, as the sales to metallurgical sector remain under pressure.

Meanwhile, the anthracite division had increased its production by 4% and its sales by 14% in the six months.

Improved export sales at the Springlake colliery and the ramp-up to the inland metallurgical market at the Somkhele mine had assisted in increasing the division’s profit by 70%.

However, subsequent to the end of the half-year, the anthracite division had seen a reduction in demand for its products for the inland metallurgical markets, as a result of the local ferrochrome industry having reduced its production by about 90%, stated Petmin.

While the company had seen some recovery in the market, this was taking place slowly.

Nevertheless, Petmin expected the reduction in revenues from the inland market to be offset by increased revenues as a result of sales at higher selling prices.

Petmin was in the process of selling the Springlake Colliery to empower firm Shanduka Coal for R145-million.