Wrap Text
Report for the quarter ended 31 December 2019
MC Mining Limited
Previously Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000MCM9
JSE share code: MCZ
ASX/AIM code: MCM
ANNOUNCEMENT 28 January 2020
REPORT FOR THE QUARTER ENDED 31 DECEMBER 2019
UITKOMST COLLIERY GENERATES PLEASING RESULTS
MC Mining Limited (“MC Mining” or the “Company”) which operates in South Africa, together with its
subsidiaries, hereby provides its update for the three months ended 31 December 2019, the second quarter (the
“Quarter”) of the Company’s 2020 financial year. All figures are denominated in United States dollars unless
otherwise stated. Safety metrics are compared to the preceding quarter while financial and operational metrics
are measured against the comparable period in the previous financial year. A copy of this report is available on
the Company's website, www.mcmining.co.za.
Salient operational features
- Safety initiatives continued at the high-grade Uitkomst metallurgical and thermal coal mine (“Uitkomst
Colliery” or “Uitkomst”) with two lost-time injuries (“LTIs”) recorded during the Quarter (FY2020 Q1: five
LTIs);
- Optimisation initiatives and changes in mine management implemented during H2 CY2019 resulted in
Uitkomst’s run-of-mine (“ROM”) coal production for the Quarter increasing 13% compared to the
December 2018 period (127,021 tonnes (“t”) vs. 112,562t);
- Sales of high-grade metallurgical, thermal and high-ash middlings coal was 24% higher than the comparative
period (84,578t vs. 68,359t);
- 8,817t of high-ash middlings coal sold during the Quarter (FY2019 Q2: 0t);
- Continuation of composite debt/equity funding initiatives for the Makhado hard coking coal project
(“Makhado Project” or “Makhado”);
- Vele semi-soft coking and thermal coal colliery (“Vele Colliery”) remained on care and maintenance during
the Quarter, but the Vele processing plant is expected to be refurbished and recommissioned as part of
Phase 1 of the Makhado Project; and
- The South African Department of Mineral Resources (“DMR”) granted a mining right for the 74% owned
Generaal coking and thermal coal project (“Generaal Project”), one of the three projects comprising the
Company’s Greater Soutpansberg Project (“GSP”).
Coal market and financial features
- API4 export thermal coal prices increased from $59/t in September 2019 to $83/t in December 2019 with
average prices for the Quarter of $76/t (FY2019 Q2: 96/t);
- Premium hard coking coal (“HCC”) prices declined significantly in the second half of CY2019 with average
prices during the Quarter of $139/t (down from $223/t Q2 FY2019); and
- Available cash at Quarter-end of $3.5 million ($5.3 million at the end of September 2019) with restricted
cash of $0.03 million.
David Brown, CEO commented:
“Uitkomst generated extremely pleasing results for the Quarter with the change of mine management and
optimisation initiatives implemented at the colliery earlier in H2 CY2019 yielding positive results and ROM coal
production improved 13% on the comparative three-months. This follows the 8% improvement in ROM coal
production recorded in the September 2019 quarter. The Quarter also witnessed increases in API4 export coal
prices accompanied by improved domestic demand for Uitkomst’s metallurgical and thermal coal. This resulted
in sales for the three months increasing 24% compared to Q2 FY2019, improving operating cash flows and
profitability. The colliery continues to assess potential coal marketing opportunities.
The Company had a very successful CY2019 with the completion of key milestones required for the development
of our flagship, fully permitted Makhado Project. This included the acquisition of the remaining properties and
securing of Phase 1 hard coking and thermal coal off-take agreements. Phase 1 utilises the existing Vele Colliery
processing facility as well as previously tested logistics infrastructure and has an internal rate of return in excess
of 45% and a payback of less than 2.5 years. The progress facilitated the commencement of the Phase 1
composite debt/equity funding initiatives and resulted in the Company securing a $17 million term-loan from
the IDC, which will contribute to the $52 million required to develop Phase 1 and reflects their support for the
Makhado Project. MC Mining is progressing the remaining Phase 1 funding requirements and anticipates that
these will be completed in H1 CY2020 with construction commencing in H2 CY2020.”
QUARTERLY COMMENTARY
Uitkomst Colliery – Utrecht Coalfields (70% owned)
The completion of a re-training programme and continued key focus on safety contributed to the improved
performance at Uitkomst and the colliery recorded two LTIs during the Quarter (FY2020 Q1: five LTIs).
The optimisation initiatives and management changes implemented during H2 CY2019 continued to yield
improvements and ROM coal production was 13% higher than the comparable period (127,021t vs 112,562t).
The ROM coal generated high-grade metallurgical and thermal coal sales of 75,761t compared to 67,606t in Q2
FY2019 and included the sale of carry-over inventory from the previous quarter of 6,815t (FY2019 Q2: 4,414t).
Uitkomst sold 8,817t (FY2019 Q2: 0t) of high-ash middlings coal during the Quarter (FY2019 Q2: nil t).
Uitkomst’s revenue benefitted from improved production levels as well as higher API4 coal prices compared to
the preceding three months. However, the average API4 international thermal coal prices were 21% lower than
the comparative period in 2019 ($76/t vs $96/t). Production costs per ROM tonne declined from $49/t to $36/t,
benefitting from the 13% increase in ROM coal production, a 3% weakening of the ZAR:US$ exchange rate as
well as a reduction in mining costs following the implementation of cost control measures.
Quarter to end-Dec Quarter to end-Dec
2019 2018 %change
Production tonnages
Uitkomst ROM (t) 127 021 112 562 13%
Sales tonnages
Own ROM (t) 75 761 67 606 12%
Middlings sales 8 817 - 100%
Purchased ROM to blend (t) - 753 (100%)
84 578 68 359 24%
Quarter financial metrics
Revenue/t ($) 70.25 91.25 (23%)
Revenue/t (ZAR) 1 033 1 306 (21%)
Production cost/ROM tonnes ($)^ 36.08 48.92 (26%)
^ costs are all South African Rand based
The Uitkomst Colliery has an estimated 15-years life-of-mine (“LOM”) which includes the development of a north
adit (horizontal shaft). The colliery is in the process reassessing options regarding the design of the planned
north adit.
Makhado Hard Coking Coal Project – Soutpansberg Coalfield (69% owned)
The fully permitted Makhado Project recorded no LTIs (FY2020 Q1: nil) during the Quarter.
MC Mining’s flagship Makhado Project has very favourable economics and the phased development thereof will
deliver positive returns for shareholders. Makhado has a LOM in excess of 46 years comprising a nine-year Phase
1 LOM and Phase 2, which will be mined for more than 37 years.
The Company made significant progress in the development of Makhado during CY2019, including securing off-
take agreements for the Phase 1 HCC and thermal coal by-product and the construction of the project will
position MC Mining as South Africa’s pre-eminent HCC producer.
The Makhado Phase 1 construction comprises the development the west pit and modifications to the existing
Vele Colliery processing plant and the funding required is some R700 million ($52 million) and includes the
settlement of the existing 2017 IDC loan facility. The Company has progressed the fund raising initiatives to
secure the funding for the construction of Phase 1 and anticipates that this will be completed in H1 CY2020
followed by a nine-month construction period, with first coal sales in H1 CY2021. The initial step in the Phase 1
composite debt/equity funding process was the conclusion of a conditional R245 million ($17.0 million) term
loan facility from the Industrial Development Corporation of South Africa Limited (“IDC”). The Company is in the
process of various initiatives to raise the balance, including positive discussions with debt providers, current
shareholders and potential new shareholders at both group and project level.
Phase 1 is a critical step in the development of Phase 2 of the Makhado Project, which also has significant positive
economics, and the Company has already secured off-take agreements for circa 50% of the approximately 0.8
million tonnes per annum of Phase 2 HCC.
Vele Semi-Soft Coking and Thermal Coal Colliery – Limpopo (Tuli) Coalfield (100% owned)
The Vele Colliery remained on care and maintenance during the Quarter and no LTIs were recorded during the
period (FY2020 Q1: nil).
There were no further developments to report during the Quarter and the Vele processing plant is expected to
be refurbished and recommissioned as part of Phase 1 of the Makhado Project
Greater Soutpansberg Project – Soutpansberg Coalfield (74% owned)
The GSP recorded no LTIs (FY2020 Q1: nil) during the Quarter. The GSP is located within close proximity to the
Musina-Makhado Special Economic Zone, an area designated by government to focus on, amongst others,
energy and metallurgical industries.
The Chapudi, Mopane and Generaal Projects comprise MC Mining’s longer-term coking and thermal coal GSP.
The mining right applications for the three project areas were submitted to the DMR during 2013 with the
Chapudi Project mining right granted in December 2018. The Generaal Project contains over 407 million gross
tonnes in situ of inferred coal resources(1) and was granted a mining right by the DMR during the Quarter. The
Mopane Project mining right application is at an advanced stage and the Company is hopeful that the granting
thereof will occur in the near future.
Markets
The slowdown in the global economy during CY2019 continues to adversely affect metallurgical coal markets
with average premium HCC prices during the Quarter of $139/t (FY2019 Q2: $223/t). However, HCC prices
trended positively post Quarter-end increasing to $149/t in January 2020. Increased international demand for
South African thermal coal resulted in more favorable prices for Uitkomst coal, with average API4 thermal coal
prices improving from $61/t in Q1 FY2020 to $76/t during the Quarter (FY2019 Q2: $96/t).
Authorised by
David Brown
Chief Executive Officer
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
For more information contact:
David Brown Chief Executive Officer MC Mining Limited +27 10 003 8000
Brenda Berlin Chief Financial Officer MC Mining Limited +27 10 003 8000
Tony Bevan Company Secretary Endeavour Corporate +61 08 9316 9100
Services
Company advisors:
Ross Allister/David McKeown Nominated Adviser and Peel Hunt LLP +44 20 7418 8900
Broker
Charmane Russell/Olwen Auret Financial PR (South Africa) R&A Strategic +27 11 880 3924
Communications
Investec Bank Limited is the nominated JSE Sponsor
About MC Mining Limited:
MC Mining is an AIM/ASX/JSE listed coal exploration, development and mining company operating in South Africa. MC
Mining’s key projects include the Uitkomst Colliery (metallurgical coal), Makhado Project (coking and thermal coal). Vele
Colliery (coking and thermal coal), and the Greater Soutpansberg Projects (coking and thermal coal).
Footnote:
(1) The GSP independent Competent Persons Report can be found on the Company’s website: http://www.mcmining.co.za/our-
business/projects/gsp-mbeu-yashu
Forward-Looking Statements
This Announcement, including information included or incorporated by reference in this Announcement, may contain
"forward-looking statements" concerning MC Mining that are subject to risks and uncertainties. Generally, the words "will",
"may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking
statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ
materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors
that are beyond MC Mining’s ability to control or estimate precisely, such as future market conditions, changes in regulatory
environment and the behaviour of other market participants. MC Mining cannot give any assurance that such forward-
looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward
looking statements. MC Mining assumes no obligation and do not undertake any obligation to update or revise publicly any
of the forward-looking statements set out herein, whether as a result of new information, future events or otherwise, except
to the extent legally required.
Statements of intention
Statements of intention are statements of current intentions only, which may change as new information becomes available
or circumstances change.
MC Mining has ensured that the mineral resources quoted are subject to good governance arrangements and internal
control. The Company has engaged external independent consultants to update the mineral resource in accordance with the
JORC Code 2012 and SAMREC 2016. The units of measure in this report are metric, with Tonnes (t) = 1,000kg. Technical
information that requires subsequent calculations to derive subtotals, totals and weighted averages may involve a degree of
rounding and consequently introduce an error. Where such errors occur MC Mining does not consider them to be material.
Tenements held by MC Mining and its Controlled Entities
Change
during
Project Name Tenement Number Location Interest Quarter
Chapudi Albert 686 MS Limpopo~ 74%
Project* Bergwater 712 MS 74%
Remaining Extent and Portion 2 of Bergwater 697 74%
MS
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of Bluebell 480 MS 74%
Remaining Extent & Portion 1 of Bushy Rise 702 74%
MS
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 3 & 4 of Coniston 74%
699 MS
Driehoek 631 MS 74%
Remaining Extent of Dorps-rivier 696 MS 74%
Enfield 512 MS (consolidation of Remaining Extent 74%
of Enfield 474 MS, Brosdoorn 682 MS & Remaining
Extent of Grootvlei 684 MS)
Remaining Extent and Portion 1 of 74%
Grootboomen 476 MS 74%
Grootvlei 684 MS 74%
Kalkbult 709 MS 74%
Remaining Extent, Remaining Extent of Portion 2, 74%
Remaining Extent of Portion 3, Portions 1, 4, 5, 6, 7
& 8 of Kliprivier 692 MS
Remaining Extent of Koodoobult 664 MS 74%
Koschade 657 MS (Was Mapani Kop 656 MS) 74%
Malapchani 659 MS 74%
Mapani Ridge 660 MS 74%
Melrose 469 MS 74%
Middelfontein 683 MS 74%
Mountain View 706 MS 74%
M'tamba Vlei 654 MS 74%
Remaining Extent & Portion 1 of Pienaar 635 MS 74%
Remaining Extent & Portion 1 of Prince's Hill 704 74%
MS
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Remaining Extent & Portion 1 of Ridge End 662 MS 74%
Remaining Extent & Portion 1 of Rochdale 700 MS 74%
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 MS 74%
Sandstone Edge 658 MS 74%
Remaining Extent of Portions 2 & 3 of Sterkstroom 74%
689 MS
Sutherland 693 MS 74%
Remaining Extent & Portion 1 of Varkfontein 671 74%
MS
Remaining Extent, Portion 2, Remaining Extent of 74%
Portion 1 of Vastval 477 MS
Vleifontein 691 MS 74%
Ptn 3, 4, 5 & 6 of Waterpoort 695 MS 74%
Wildebeesthoek 661 MS 74%
Change
during
Project Name Tenement Number Location Interest Quarter
Woodlands 701 MS 74%
Kanowna M27/41 Coolgardie^ 2.99%
West and M27/47 2.99%
Kalbara M27/59 2.99%
M27/72,27/73 2.99%
M27/114 2.99%
M27/181 7.24%
M27/196 2.99%
M27/414,27/415 2.99%
P27/1826-1829 2.99%
P27/1830-1842 2.99%
P27/1887 2.99%
Abbotshall ML63/409,410 Norseman^ Royalty
Royalty
Kookynie ML40/061 Leonora^ Royalty
Royalty ML40/135,136 Royalty
Makhado Fripp 645 MS Limpopo~ 69%#
Project Lukin 643 MS 69%#
Mutamba 668 MS 69%#
Salaita 188 MT 69%#
Tanga 849 MS 69%#
Daru 848 MS 69%#
Windhoek 847 MS 69%#
Generaal Beck 568 MS-- Limpopo~ 74%
Project* Bekaf 650 MS- 74%
Remaining Extent & Portion 1 of Boas 642 MS- 74%
Chase 576 MS- 74%
Coen Britz 646 MS- 74%
Fanie 578 MS- 74%
Portions 1, 2 and Remaining Extent of Generaal 74%
587 MS-
Joffre 584 MS- 74%
Juliana 647 MS 74%
Kleinenberg 636 MS- 74%
Remaining Extent of Maseri Pan 520 MS- 74%
Remaining Extent and Portion 2 of Mount Stuart 100%
153 MT--
Nakab 184 MT-- 100%
Phantom 640 MS-- 74%
Riet 182 MT-- 100%
Rissik 637 MS- 100%
Schuitdrift 179 MT- 100%
Septimus 156 MT-- 100%
Solitude 111 MT- 74%
Stayt 183 MT-- 100%
Remaining Extent & Portion 1 of Terblanche 155 100%
MT--
Van Deventer 641 MS- 74%
Wildgoose 577 MS- 74%
Mopane Ancaster 501 MS-- Limpopo~ 100%
Project* Banff 502 MS- 74%
Bierman 599 MS- 74%
Change
during
Project Name Tenement Number Location Interest Quarter
Cavan 508 MS 100%
Cohen 591 MS-- 100%
Remaining Extent, Portions 1 & 2 of Delft 499 MS- 74%
Dreyer 526 MS-- 74%
Remaining Extent of Du Toit 563 MS- 74%
Faure 562 MS 74%
Remaining Extent and Portion 1 of Goosen 530 MS 74%
--
Hermanus 533 MS- 74%
Jutland 536 MS-- 100%
Krige 495 MS- 74%
Mons 557 MS- 100%
Remaining Extent of Otto 560 MS (Now 74%
Honeymoon)-
Remaining Extent & Portion 1 of Pretorius 531 MS- 74%
Schalk 542 MS- 74%
Stubbs 558 MS- 100%
Ursa Minor 551 MS-- 74%
Van Heerden 519 MS-- 74%
Portions 1, 3, 4, 5, 6, 7, 8, 9, Remaining Extent of 74%
Portion 10, Portions 13, 14, 15, 16, 17, 18, 19, 20,
21, 22, 23, 24, 26, 27, 29, 30, 35, 36, 37, 38, 39, 40,
41, 44, 45, 46, 48, 49, 50, 51, 52 & 54 of Vera 815
MS
Remaining Extent of Verdun 535 MS- 74%
Voorburg 503 MS— 100%
Scheveningen 500 MS- 74%
Uitkomst Portion 3 (of 2) of Kweekspruit No. 22 KwaZulu-Natal~ 70%
Colliery and Portion 8 (of 1) of Kweekspruit No. 22 70%
prospects Remainder of Portion 1 of Uitkomst No. 95 70%
Portion 5 (of 2) of Uitkomst No. 95 70%
Remainder Portion1 of Vaalbank No. 103 70%
Portion 4 (of 1) of Vaalbank No. 103 70%
Portion 5 (of 1) of Vaalbank No. 103 70%
Remainder of Portion 1 of Rustverwacht No. 151 70%
Remainder of Portion 2 of Rustverwacht No. 151 70%
Remainder of Portion 3 (of 1) of Rustverwacht No. 70%
151
Portion 4 (of 1) Rustverwacht No.151 70%
Portion 5 (of 1) Rustverwacht No. 151 70%
Remainder of Portion 6 (of 1) of Rustverwacht No. 70%
151
Portion 7 (of 1) of Rustverwacht No. 151 70%
Portion 8 (of 2) of Rustverwacht No. 151 70%
Remainder of Portion 9 (of 2) of Rustverwacht No. 70%
151
Portion 11 (of 6) of Rustverwacht No. 151 70%
Portion 12 (of 9) of Rustverwacht No. 151 70%
Portion 13 (of 2) of Rustverwacht No. 151 70%
Portion 14 (of 2) of Rustverwacht No. 151 70%
Portion 15 (of 3) of Rustverwacht No. 151 70%
Portion 16 (of 3) of Rustverwacht No. 151 70%
Change
during
Project Name Tenement Number Location Interest Quarter
Portion 17 (of 2) of Rustverwacht No. 151 70%
Portion 18 (of 3) of Waterval No. 157 70%
Remainder of Portion 1 of Klipspruit No. 178 70%
Remainder of Portion 4 of Klipspruit No. 178 70%
Remainder of Portion 5 of Klipspruit No. 178 70%
Portion 6 of Klipspruit No. 178 70%
Portion 7 (of 1) of Klipspruit No. 178 70%
Portion 8 (of 1 )of Klipspruit No. 178 70%
Portion 9 of Klipspruit No. 178 70%
Remainder of Portion 10 (of 5) of Klipspruit No. 70%
178
Portion 11 (of 5) of Klipspruit No. 178 70%
Portion 13 (of 4) of Klipspruit No. 178 70%
Remainder of Portion 14 of Klipspruit No. 178 70%
Portion 16 (of 14) of Klipspruit No. 178 70%
Portion 18 of Klipspruit No. 178 70%
Portion 23 of Klipspruit No. 178 70%
Remainder of Portion 1 of Jackalsdraai No. 299 70%
Remainder of Jericho B No. 400 70%
Portion 1 of Jericho B No. 400 70%
Portion 2 of Jericho B No. 400 70%
Portion 3 of Jericho B No. 400 70%
Remainder of Jericho C No. 413 70%
Portion 1 of Jericho C No. 413 70%
Remainder of Portion 1 of Jericho A No. 414 70%
Remainder of Portion 2 (of 1) of Jericho A No. 414 70%
Portion 3 (of 1) of Jericho A No. 414 70%
Portion 4 (of 1) of Jericho A No. 414 70%
Portion 5 (of 2) of Jericho A No. 414 70%
Portion 6 (of 1) of Jericho A No. 414 70%
Margin No. 420 70%
Vele Colliery Portions of Overvlakte 125 MS (Remaining Extent, Limpopo~ 100%
and prospects 3, 4, 5, 6, 13, 14)
Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
Tshikunda Certain portions of Unsurveyed State Land known Limpopo~ 60%
as Mutale
* Form part of the Greater Soutpansberg Projects
- Lapsed – Mining Right Application Lodged
-- Valid – Mining Right Application Lodged
~ Tenement located in the Republic of South Africa
^ Tenement located in Australia
# MC Mining’s interest will reduce to 69% on completion of the 26% Broad Based BEE transaction
Date: 28-01-2020 09:00:00
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