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SALUNGANO GROUP LIMITEDSALUNGANO GROUP LIMITEDSALUNGANO GROUP LIMITED

SALUNGANO GROUP LIMITED

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Our opinion on the current state of SALUNGANO(SLG)Salungano, previously Wescoal, engages in the mining and trading of coal. The company began production in 2021, producing coal from its Moabsvelden mine for Eskom. Today, the company produces 300 million tons from five coal mines. Mining accounts for 82% of revenue, but it owns 50% of the Arnot Mine and is looking to broaden its business into other parts of energy. In its financials for the six months to 30th September 2023, the company reported revenue down 30% and a headline loss of 90c per share compared with a loss of 19,64c in the previous period. The company's net asset value fell to 37c per share from 178c in the previous period. The company said, "The Group continued to operate with only one Eskom contract, with the Elandspruit and Vanggatfontein Collieries continuing to supply Eskom through rectification into the Neosho contract." The company will apply for the lifting of the suspension now that the FY2023 financial results and integrated annual report, as well as the FY2024 interim financial results, have been published, but that has not yet happened. On 4th July 2023, the company announced that three of its directors had resigned, resulting in a sharp drop in the share's price. On 21st August 2023, trading was suspended in Salungano shares by the JSE. It appears from a quarterly update that the 2024 financials are now only expected to be published by 30th June 2025—so the share remains suspended.
JSE:SLG
by PDSnetSA
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.
JSE:SLG
by PDSnetSA
Our opinion on the current state of SALUNGANO(SLG)Salungano, formerly known as Wescoal, is involved in the mining and trading of coal, having commenced production in 2021 with coal sourced from its Moabsvelden mine primarily for Eskom. The company has grown substantially, now producing 300 million tons from five coal mines, with mining operations constituting 82% of its revenue. Additionally, Salungano holds a 50% stake in the Arnot Mine and is exploring opportunities to expand its business into other energy sectors. In its financial report for the year ending 31st March 2023, published on 21st May 2024, Salungano reported a decline in revenue to R4.79 billion from R5.14 billion the previous year, along with a headline loss of 58.65 cents per share, significantly wider than the loss of 6.13 cents per share in the prior period. The company attributed the disappointing results to "notably lower" production and sales volumes across its operations due to various operational challenges, which led to a 6.8% decrease in revenue. The global energy market's volatility, particularly with the looming threat of a recession, is impacting Salungano's performance. Additionally, the company is working to lift the suspension of its shares on the JSE, initiated following the publication of its financial results and the interim financial results for FY2024. Compounding the company's challenges, on 4th July 2023, three directors resigned, triggering a sharp decline in the share price. Subsequently, on 21st August 2023, trading of Salungano shares was suspended by the JSE. The confluence of operational difficulties, leadership changes, and market conditions suggests a period of significant uncertainty for Salungano.
JSE:SLG
by PDSnetSA
Our opinion on the current state of SLGSalungano, previously Wescoal, engages in the mining and trading of coal. The company began production in 2021 producing coal from its Moabsvelden mine for Eskom. Today the company produces 300m tons from five coal mines. Mining accounts for 82% of revenue, but it owns 50% of the Arnot Mine and is looking to broaden its business into other parts of energy. In its financials for the six months to 30th September 2022 the company reported turnover down 12,9% and a headline loss of 19,64c compared with a profit of 20,69c in the previous period. The company said, "...the group's overall financial performance was disappointing in HY23, impacting cash flow generation and temporarily affecting our ability to realise our diversification aspirations". Technically, after a long upward trend lasting from November 2020 to March 2022, the share appears to have entered a new downward trend with a collapse on the announcement of the headline loss for the six months to 30th September 2022. Obviously, the price of energy is a critical component and the imminence of a recession on world markets is beginning to weigh on this share. In a quarterly report on 30th November 2023 the company said, "It is the Company's intention to release the FY2024 interim financial results as soon as possible after the release of the FY2023 financial results. The Company will apply for the lifting of the Suspension once the FY2023 financial results and integrated annual report, as well as the FY2024 interim financial results, have been published". On 4th July 2023 the company announced that three of its directors had resigned resulting in a sharp drop in the share's price. On 21st August 2023 trading was suspended in Salungano shares, by the JSE.
JSE:SLG
by PDSnetSA