Intra Energy Corporation (ASX: IEC) has achieved an underlying profit for the December 2018 half-year on the back of increased coal production and sales from its Tanzanian mine.
Releasing its unaudited financial results to the market today, Intra Energy announced unaudited underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $3.27 million.
This is a significant turnaround for the company given it posted a December 2017 half-year underlying EBITDA loss of $787,000.
Sales revenue for the December half-year totalled $26.48 million, up from $15.08 a year earlier.
The improvement was attributed to an increase in production over the period, better efficiencies at the mine and a continued focus on cost management.
For the December quarter, Intra Energy produced 181,336 tonnes of coal from its Tancoal mine in Tanzania, which translated into 211,147t of coal being sold for the period, up 58.1% on the same time last year.
Intra Energy said the forecast rains did not have a material effect on sales and production due to being lighter than expected and the amendments implemented during 2018 to improve the capacity of the mine to manage the rainy seasons.
The Sydney-based company’s 70%-owned Tancoal mine is the largest operational coal mine in Tanzania and East Africa. Tanzanian state-owned National Development Corporation owns the remaining 30% of the operation.
At the end of the quarter, the company had $3.34 million cash on hand.
Despite the sales and revenue jump, the company has cautioned some possible challenging times may be ahead.
Intra Energy expects the forthcoming period will see lower results due to the requirement to increase production capacity to manage sales and have an adequate stockpile available.
A dispute with Caspian, one of its local contractors, is also ongoing.
“Several threats remain which could hinder the orderly delivery of coal, the Caspian Contractor matter which needs resolution and the potential road tax on coal which would cripple the trucking and consumer industry,” Intra Energy chairman Graeme Robertson said.
“With the satisfactory conclusion of these matters, production and sales will increase going forward.”
Intra Energy remains the dominant coal supplier to industrial energy users in the Eastern African region. The company is currently working on broadening the supply of its coal into regional and seaborne industrial and power station markets to lessen its dependence on the cement industry.
Alongside this, it is working on the development of export facilities through the Port of Mtwara to allow barge and/or Handymax deliveries to overseas consumers.
The company’s shares soared 40% to $0.014 by midday trade.