Our opinion on the current state of SLG

1 Ara 2023

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 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.