WHY WE LIKE IT

We think UNV shares are way undervalued, but with output ramping up in the 2017-18 year this situation won't last for long. The South African coal producer recently started production at its second mine, the New Clydesdale Colliery and the operation is running smoothly. Output from the company's first mine, Kangala, is underpinned by a "take or pay" agreement with the state-owned utility Eskom. On current trends, UNV should be in a position to start paying dividends and/or return capital to shareholders.

WHAT'S NEW

After a poor December quarter, UNV reported total March quarter sales of 729,000 tonnes, 7% higher. This resulted in revenue of $43.5m and operating cash flow of $9.2m; its cash on hand is $7.9m. Kangala is humming along, producing an annualised 2.4mt but has room for improvement; while its NCC underground operation are doing a "steady state" 900,000 tonnes a year. But with the open pit expansion the company is targeting an annualised rate of over 3m tonnes a year. UNV expects to be a substantive miner with annual output of 4-4.5m tonnes in 2017-18.