(Alliance News) - Thungela Resources Ltd said on Thursday it will take an estimated ZAR1.1 billion hit from the closure of parts of its Khwezela mine, but indicated that it expected another strong performance for 2022 despite rail constraints in South Africa.

The Rosebank-based coal miner said it had taken the strategic decision to close parts of the Khwezela complex in an effort to reduce illegal mining on the site.

Revised closure cost estimates resulted in a non-cash income statement charge of ZAR1.1 billion in 2022, the group said.

"These estimates are higher compared to previous assessments due to higher diesel costs, an increase in mining inflation assumptions, and the cost of rehabilitating previously rehabilitated mining areas due to surface disturbances caused by illegal mining activities," it added.

In a pre-close statement on Thursday, Thungela Chief Financial Officer Deon Smith said the company had continued to deliver strong earnings for the 11 months to November 30 and expected to achieve another strong set of financial results for this year.

Earnings per share is expected to be at least ZAR125.00 in 2022, more than doubled from ZAR61.08 last year, while headline earnings per share is likely to almost double to ZAR131.00 from ZAR66.57, due to strong coal prices.

The benchmark coal price has averaged USD276.57 per tonne for the year to November 30, jumping from USD124.11 a tonne last year.

"Although prices remain firm, they continue to be volatile," Smith cautioned, adding that demand for energy, including thermal coal, remained firm into the second half of the year given continued supply constraints coupled with the need for energy security globally.

Smith also said poor rail performance hurt the group's ability to move coal to port, with a concomitant impact on export sales.

Export saleable production for 2022 is expected to be 12.8 million tonnes, lower than the revised guidance range of between 13.0 million tonnes and 13.6 million tonnes issued in August, and 15% lower than 2021 export saleable production of 15.0 million tonnes.

This disappointing performance was attributed mainly to the state-owned transport utility Transnet SOC Ltd, and also illegal mining activity, and increased incidents of electricity loadshedding.

In the second half of the year, Transnet moved 49.0 million tonnes, compared to 53.3 million in the first half.

Shares in Thungela rose by 0.6% to ZAR291.20 on Thursday morning in Johannesburg, while they gained 1.1% to 1,375.000 pence in London.

By Artwell Dlamini, Alliance News reporter

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