Mining & Energy

Minergy experiences a year of two distinct halves, but the foundation set for a sustainable future


28 September 2023, – Gaborone – Minergy, the coal mining and trading company, today released
results for the year ended 30 June 2023, indicating that strong momentum in the first half was
eroded by year-end due to changes in the international coal market.
Outgoing Chief Executive Officer (“CEO”) Morné du Plessis indicated that the year under review had
been one of changing fortunes. During the first half of the year (H1 2023) Minergy operated within
an unprecedented thriving sales environment. This had supported full production, with the Group
achieving new monthly sales and production records.
“However, in the second half of the year, i.e., H2 2023 there was a sudden and significant drop in
coal prices due to excess product in the European market, caused by voracious buying,” du Plessis
The situation was compounded by the stoppage by the mining contractor at the beginning of March
2023. Downsized operations only resumed during the week of 7 April 2023.
However, comparing annual statistics does show an improvement over prior years, with four
consecutive years of production and sales increases, even with the H2 2023 setbacks. “Typically,
mining and processing volumes are still 19% higher than FY22, with overburden exceeding the prior
year by 35%. Absolute values also represent new annual performance records. Overall sales were
10% higher but trended at >50% volume increases at the end of H1 2023.”
Du Plessis added that although the size of operations at the Masama Coal Mine is being reduced to
balance production levels and costs in this current market, Minergy strongly believes that the quality
of its products, its loyal customer base, and logistical advantages will set the tone for a solid future.
Total revenue increased by 21% to P512 million (2022: P425 million) and pure coal sales (excluding
transport recoveries) increased to P459 million (2022: P297 million). To illustrate the impact
between half years, H1 2023 pure coal sales amounted to P298 million (which is the same amount as
the full FY 2022), tapering down to P161 million in sales in H2 2023 due to the difficult market
Compared to 2022, operating losses decreased by 30% to P52 million, with EBITDA losses decreasing
by 43% to P32 million, continuing the trend of decreasing losses, buoyed by the positive operating
and EBITDA numbers from H1 2023.
Mining costs, specifically diesel and explosives, increased >50% from the previous period, due to the
global energy security crisis, only stabilising late in H2 2023 but remaining at high levels. Mining cost
increases were exacerbated by a higher mining strip ratio and additional fixed costs accompanying
the ramp-up to full capacity.
Du Plessis was pleased with the first-time generation of cash flow from operating activities,
compared to historical cash utilisation.


Safety, health, and employment
“Safety is paramount and remains our top priority. The excellent safety records, with no lost time
injuries, are a clear testament to the team's efforts on the ground who have implemented effective
safety systems. We remain vigilant and are grateful to have had no fatalities, with only one minor
lost time injury since our inception.”
Du Plessis added that 97% of Minergy’s employees – who are on average 95%-96% Batswana – are
either fully vaccinated or have received their first dose of the COVID-19 vaccine. “Sadly, as part of
the cost restructuring process post the March 2023 halting of mining operations, the workforce
decreased to 366 employees.”
Subsequent events and outlook
A significant amount of strategic positioning has taken place subsequent to year-end, with Minergy
successfully concluding a further P90 million in funding from its main funder, the Minerals
Development Company Botswana (“MDCB”). The proceeds were disbursed on 3 August 2023 and
allocated to the trade payable arrears of the mining contractor.
As part of the agreement, the MDCB has seconded Matthews Bagopi for 12 months to augment the
management team. He fulfils the role of Acting Chief Executive Officer at Minery Coal, a subsidiary of
Minergy Limited, as announced. The CEO of the MDCB has also subsequently joined the Minergy
Limited Board of Directors.
Minergy has issued a notice of termination to its mining contractor Jarcon Opencast Mining
Botswana (Pty) Ltd (“Jarcon”). The termination of the mining contract is in line with the strategic
intent of the Board of Directors and Minergy’s financiers to stabilise operations and bring the
business to sustainable profitability. The Board of Minergy Coal has identified a new mining
contractor for the Masama Coal Mine and negotiations are underway to finalise the terms of a new
mining contract. Minergy will keep the market updated on the progress.
During this transition period, arrangements have been made to ensure business continuity and
minimal disruption in coal supply to customers, by inter alia using stock holdings available. To
augment the management team with the departure of Mr. du Plessis, various human resources have
been made available through the MDCB. The MDCB, indirectly the Government of Botswana, has
confirmed its continued support for Minergy, which is highly appreciated and comforting.
In conclusion, du Plessis said that although he will be departing after seven years of direct
involvement, there is a strong foundation now in place for the future, with an established and fully
operational mine.
“Botswana now has open-cast coal mining operations, skills and knowledge in place, which the
country will gain tremendous value from not only through royalties and forex but also the
permanent development of coal mining skills and employment opportunities.”

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