Kropz records $5.7m loss for 2023 as Elandsfontein ramps up

As phosphate miner Kropz is still ramping up to steady-state production, the company recorded a $5.7-million gross loss for the 12 months ended December 31, 2023.

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As the Kropz phosphate mining business remains in the process of stabilizing production, the company recorded a gross loss of $5.7 million in the 12 months ended December 31, 2023.

The company said on March 28 that the loss was mainly due to the fact that the Elandsfontein mine, as a new entrant, had to reduce its sales price and consider lowering grades and increasing production costs per ton as part of the process of increasing production capacity. In addition, operating costs per tonne remain high as production in Ellandsfontein is below planned production levels.

Sales from the test production phase generated $30.2 million in revenue this year, according to Kropz. Klopz said the company faced significant challenges during the year due to unprecedented rainfall in the Western Cape. Continued heavy rainfall combined with large amounts of water in the mines resulted in extremely wet mining conditions, affecting the company’s operations.

In response to this problem, the company has taken a variety of measures, mainly focusing on improving mine drainage to alleviate waterlogging in the mine area, and implementing ore storage and blending strategies. The amount of ultrafine sludge or natural sludge contained in the ore also limits Kropz’s throughput.

To this end, subsidiary Kropz Elandsfontein is currently making strategic investments in new equipment to enable the plant to handle and process challenging sludge material more efficiently. Production at the Elandsfontein plant is expected to increase by more than 40% once the new equipment comes online.

The project is expected to be fully operational by the end of the second quarter. In addition to managing wet mining conditions, Kropz Elandsfontein also uses technology to separate and store the various ore materials present on site. The company said it is analyzing and testing different types of ore stored in the stockpile to identify and refine appropriate methods of mining and processing the stockpile to increase efficiency.

“The Elandsfontein mine is still in its trial production phase and is expected to face further challenges on its way to full production,” Klopz warned. The company also emphasized that it had achieved one year without any workplace accidents. The carrying value of property, plant, equipment and exploration assets at the end of 2023 was $112.6 million, a slight increase from $111.4 million as of December 31, 2022. Additionally, the company has cash reserves of $3.5 million.

At the end of 2023, the value was $2.1 million, and at the end of 2022, it was $2.1 million. Additionally, shareholder loans and derivatives totaled $90.5 million as of December 31, 2023, an increase from $55.1 million a year ago. Trade and other payables were $8.8 million at year-end, up from $7.3 million at the end of 2022. To meet current liquidity needs, Kropz, Kropz Elandsfontein and the ARC Fund agreed on 14 September last year to provide a further bridging credit facility of R250 million to Kropz Elandsfontein.

By the end of the year, R250-million had been withdrawn from the facility. Additionally, in December last year, Kropz Elandsfontein secured an additional R115 million bridging credit facility from the ARC Fund to meet current liquidity needs. By the end of the year, R62.5 million had been withdrawn from the facility. Meanwhile, Klopz said they are still working on possible financing solutions for the development of the Hinda project in Congo-Brazzaville.

The company said it is working with local governments on project development and progress. However, a scaled-down project is being reviewed to propose a practical, low-capital investment project to demonstrate the concept of producing phosphate concentrate in Congo-Brazzaville and its subsequent export.

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