Sentula Mining, a JSE-listed company (JSE:SNU) focused on mining services and coal mining in southern Africa, believes the company will again attain rapid growth over the next three years, while it delivers on a pipeline of projects built up since its inception 18 months ago.
Robin Berry, CEO of Sentula Mining, said today the company would look at the bigger continent of Africa where it already had bases to grow its main business of mining services from over the next few years.
The company saw potential to grow its mining services in Mozambique which held an opportunity for contract earthmoving work and in the region of the Zambian copper belt and in the south Democratic Republic of the Congo (DRC). Botswana presented opportunity from the drilling for equity perspective as exploration drilling was in extremely short supply at the moment, while resources have been declared here.
Berry said the company's mining services currently had three pillars of good contract work with Anglo American and BHP Billiton, its two key customers, work with the burgeoning junior sector and long-term contracts in its exploration drilling division.
The company also saw opportunity for consolidation in the coal mining sector in the near term as Sentula owned infrastructure with extra capacity as well as export capacity through the Port of Richards Bay, while the junior sector in South Africa now had both a number of listed and unlisted companies in South Africa.
Berry said there was opportunity to put businesses together as some juniors had access to resources but didn't have operating assets producing cashflow.
He said the biggest upside in coal was in South Africa and Botswana. He likened future growth in this part of the business to the organic and acquisitive growth that has taken place in its mining services.
Berry said the company had a competitive advantage in the southern African region as it had mining expertise, some gained from its contract work on key clients.
Sentula also stood much to gain from exploration drilling that was in extremely short supply at the moment. The company was skilled in exploration, had the resources to do it and could gain equity in companies by undertaking drilling on their behalf.
Berry believes the company also has a sound knowledge base, including more than 20 years of experience in the coal industry and mining finance, enabling it to identify worthwhile opportunities.
Sentula's coal mining business comprises of several joint ventures and the company's objective is to become a junior coal miner producing between 15 and 20mt within five years.
It currently has the Nkomati anthracite and Koornfontein mines in production in South Africa that respectively delivers 0,45mt of antrachite coal for a coking coal blend and 3,9m thermal coal for export and domestic use that both contain further upside.
Its coal portfolio also includes the Schoongezicht and Bankfontein development properties owned with Merafe Coal that will start production by the first and second quarter of next year to add annual sales of 2,85mt, and several exploration projects with Mabapa Mining in South Africa, Jonah Coal in Zambia ad Asenjo Energy in Botswana.
Sentula today released results for the financial year ending March 2008 that saw revenue increasing from R1,38bn ($174m) in 2007 to R2,66bn ($336m), operating profit rising from R189,57m ($24m) to R376,3m ($47.6m) and earnings per share increase from 77,9 cents (9.87 US cents) per share to 107,5 (13.6) cents per share.