Our opinion on the current state of SALUNGANO(SLG)Salungano, formerly Wescoal, focuses on coal mining and trading, producing 300 million tons annually from five mines, with mining contributing 82% of its revenue. It began production in 2021, primarily supplying Eskom from its Moabsvelden mine. The company also owns 50% of Arnot Mine and is exploring ways to diversify within the energy sector.
For the six months ending 30th September 2024, Salungano reported revenue down 30% and a headline loss of 90c per share, worsened from a 19.64c loss in the previous period. Its net asset value dropped significantly to 37c per share from 178c. Operations have continued with only one Eskom contract, supplying through rectification into the Neosho contract from its Elandspruit and Vanggatfontein Collieries.
The company faced internal instability, with three directors resigning in July 2023, leading to a sharp share price decline. Consequently, on 21st August 2023, the JSE suspended trading in Salungano shares. While the company has completed and published its financial reports, it must still apply for the lifting of the suspension.
