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Shares in South African coal miner Bisichi surged by over a third on Friday, following the company’s announcement of a significant increase in half-year profits. This growth was fueled by a substantial rise in production and a notable reduction in operating costs.
For the six months ending 30 June, Bisichi (LSE:BISI) reported a pre-tax profit of £5 million, a dramatic increase from the £0.3 million recorded during the same period last year. The sharp improvement in profitability was largely driven by the company’s Black Wattle mining operation, where production doubled to 708,000 metric tonnes. This represented a substantial increase from the previous year’s output and a marked rise from 453,000 tonnes produced in the second half of last year.
The company’s focus on cost management played a crucial role in enhancing its bottom line. Operating costs were significantly reduced to £18.4 million, down from £24.7 million in the prior year. This reduction in costs helped offset the impact of lower revenues, which fell to £23.5 million from £25.9 million. The decline in revenue was primarily attributed to lower coal prices achieved by the company’s coal processing operations. Additionally, Bisichi faced ongoing challenges with the South African rail network, which limited the volume of coal that could be exported, further affecting revenue.
Despite these revenue challenges, Bisichi remains optimistic about the future. The company expects to continue benefiting from a new mining area at Black Wattle in the second half of the year. Furthermore, there has been a recent stabilisation in coal prices in both the export and domestic markets, which the company believes will support future performance.
In its outlook, Bisichi expressed confidence in its ability to generate significant value from its South African operations. The company’s focus on operational efficiency, combined with the stabilising market conditions, positions it well for continued growth in the coming months.
By 0908 BST, Bisichi’s stock had risen by 36%, reaching 119p, reflecting the market’s positive response to the company’s strong half-year performance and optimistic outlook for the second half of the year. The surge in share price underscores investor confidence in Bisichi’s strategy and its potential to deliver further value in the near term.
