Sakari

Sakari: Macquarie note that Sakari closed at $1.50 on Wed, the same price as its early July peak. Against the background of lower international coal prices, Sakari’s 2Q12 net profit fell 39% year-on-year to $24mn. However, this is a sharp improvement over their 1Q result which was only $14mn. The improvement was helped by stronger sales volumes (2.7mt, +34%), resilient pricing (flat at US$94.6/t) and 15% improvement in Jembayan's cash cost to US$57.6/t. Sebuku production remains on track with a 30% production increase qoq and mgt has upgraded its 2012 production target to at least 2.5Mt as the production profile continues to increase. The focus remains on developing cost efficient mines within its Northern Leases. In addition to its 46% quarter-on-quarter production increase, the Jembayan operations saw a sharp reduction in cash costs. The improved key cost drivers such as stripping ratio and dumping distances contributed to the $10/t reduction quarter-on-quarter. According to mgt, Sebuku’s production rate is planned to continue towards its steady-state target of 4-4.5Mtpa over the next 18-24 months. After a slow start to 2012, Jembayan is now set to resume production increases with its order book showing a corresponding increase in shipments to customers in H2’12.