Mining weekly reported that in a move to conserve cash Wescoal has halted all major prospecting projects although it would push ahead with its plans to increase volumes at its new Wescoal mineral recovery production facility.

Wescoal said in a statement that it expected local demand to decline in the foreseeable future with no substantial price increases to be implemented until October 2009. However, it added that it had entered into favorable supply contracts in preparation of the expected downturn.

The statement further said that earnings growth would be achieved though increased volumes, reduced input costs at its washing operation, overall cost control and the focused investment of the capital it had raised. Construction on the new production facility, which would increase the production of briquettes from 2 000 tonnes per month to 20 000 tonnes per month would begin early 2009.

Wescoal financial results for the 6 months ended September 30th 2008 was in line with expectations, with the positive momentum expected to continue in the second half of 2008-09. Net profit had increased by 68% to SAR 12.85 million for the 6 months, compared with SAR 7.6 million the year before, with fully diluted headline earnings a share increasing by 46% to 10.4 cent a share, compared with 7.1 cent a share the year before.

Wescoal said that coal demand from industrial users had remained strong although domestic demand had declined owing to a mild winter, reducing the overall seasonal volumes. Despite this, the trading division had an improved performance in terms of revenues and margins, while operating profit had increased substantially. Further, the washing operation had been negatively impacted on by irregular quantity and quality of run of mine supply and, with the exception of much needed volumes, made a small operating loss during the 6 months.