LISTED mining concern, Hwange Colliery Company Limited, has acquired new exploration equipment worth $32 million from China as part of plans to improve production output.
Report by Own Correspondent
This is despite the fact that according to a recently concluded forensic report, the company’s liabilities are in excess of $150 million, with $19 million said by management to be unrecorded.
The first batch of the new equipment comprises 100-tonne dump trucks, 50-tonne dump trucks, excavators and mobile cranes and is expected to arrive in the country early next month.
According to management, a deposit of $2,2 million has been paid from internal resources to Sany Heavy Equipment Corporation of China for the supply of equipment following a tender floated last year.
Hwange Colliery, which has the capacity to produce five million tonnes of coal per year, has been operating below capacity due to obsolete machinery.
According to management, the company is also facing liquidity challenges with the monthly revenue accrual averaging $8 million against obligations of above $14 million.
Hwange’s net profit tumbled 26% to $3,1 million in the full-year to December 31 2012, weighed down by increased finance costs, which rose by more than double during the period.
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Finance costs in the period increased to US$4,1 million compared to $1,8 million recorded the previous year against growth in borrowings to $31,6 million from $24,9 million.
However, management has indicated that loans have been rescheduled to periods of up to 24 months and were currently being serviced through ring-fencing of specific customers while borrowings below $1 million were liquidated on the basis of arrangements with lenders.
The debts are expected to be fully retired in the long term, depending on the improvement in production volumes.
According to the company, the permanent remedy to the debt situation will yield automatically when production volumes increase to achieve the targeted design capacity.
