Cost pressures weigh heavily on Hwange

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HWANGE Colliery Company (Hwange) says high costs and low output have kept it in a net current liability position.

The company, however, swung to a $3,5 million profit in the half year to June — from a $23 million loss in 2018.
But total liabilities still exceeded its total assets by $286 million.
“The net current liability position is attributable to high fixed overheads associated with the company’s operations,” Hwange said in a note accompanying its results.
The losses were also attributable to challenges associated with equipment failures and resulting in increased direct costs of production without a corresponding rise in output,” it said.
And this “may cast significant doubt on its ability to continue as a going concern”, Hwange said. The company’s administrative costs increased to $23 million during the period under review from $10,8 million in the previous period. Its finance costs grew to $12,8 million from $8 million.
This comes as the cost of doing business in Zimbabwe has continued to rise at an alarming rate, amid worsening cash and foreign currency shortages in the country.
The listed miner, however, says it has reengaged a contractor to provide mining services at its open cast mine in line with its strategy to expand its mining activity.
“The company refurbished the continuous miner and the related mining equipment and this is expected to improve underground operations. Management, therefore, believes that the company’s ability to continue to operate is dependent upon future profitability,” the company said.