Wrap Text
Activities report for the quarter ended 31 December 2021
MC Mining Limited
Previously Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000MCM9
JSE share code: MCZASX/AIM code: MCM
31 January 2022
ACTIVITIES REPORT FOR THE QUARTER ENDED 31 DECEMBER 2021 FOR
MC MINING LIMITED (“MC Mining” or the “Company”) AND ITS SUBSIDIARY COMPANIES
HIGHLIGHTS
- Health and safety remains a priority and one lost-time injury (LTI) was recorded during the quarter
(FY2022 Q1: two LTIs);
- Measures previously implemented to restrict the spread of the COVID-19 virus at the various group
workplaces remain in place. During the quarter, three employees (FY2022 Q1: 14) contracted the
virus;
- A COVID-19 vaccination programme was implemented at the high grade Uitkomst metallurgical
and thermal coal mine (Uitkomst Colliery or Uitkomst) has resulted in 82% of Uitkomst’s
employees being fully vaccinated or having had at least one vaccine dose;
- Run-of-mine (ROM) coal production at Uitkomst was marginally lower than the December 2020
quarter (107,188 tonnes (t) vs. FY2021 Q2: 108,945t);
- 49,063t of coal sales during the quarter (FY2021 Q2: 81,486t) comprising 43,280t (FY2021 Q2:
72,656t) of high grade metallurgical and thermal coal and 5,783t (FY2021 Q2: 8,830t) of lower
grade middlings coal;
- Revenue per tonne increased to $111/t (FY2021 Q2: $66/t) due to the much higher API4 coal
prices recorded during the quarter;
- Limited activities were undertaken at the Company’s Makhado hard coking coal project (Makhado
Project or Makhado), Vele semi-soft coking and thermal coal colliery (Vele Colliery or Vele) and
Greater Soutpansberg Projects (GSP) during the quarter;
- Subsequent to the end of the quarter, the Industrial Development Corporation of South Africa
Limited (IDC) extended the repayment date for the R160 million ($10.3 million) loan plus accrued
interest from 31 January 2022 to 30 November 2022;
- The terminal drawdown date of the additional R245 million ($15.8 million) IDC term loan for the
development of Phase 1 of Makhado was extended from 31 January 2022 to 30 November 2022,
with the drawdown remaining subject to the IDC re-affirming its due diligence;
- Makhado Project composite debt/equity funding initiatives, including detailed due diligence
processes by potential funders, continued during the quarter;
- Appointment of shareholder representative Non-Executive Director Mr Junchao Liu, following the
retirement of Mr Shangren Ding; and
- Available cash and facilities at quarter-end was $3.2 million ($3.5 million at 30 September 2021)
and restricted cash was $0.03 million.
COMMENTARY
A number of parties are continuing their due diligence review for providing the balance of the funding
required by the Company to develop Makhado. MC Mining remains confident that the parties taking
part in the process will commit the necessary funds to complete the funding package, anticipated to
be finalised during H1 CY2022. The Company is progressing several alternative strategies to raise
additional funding including, but not limited to, the issue of new equity for cash in MC Mining or
subsidiary companies, or further debt funding
COVID-19
The health and safety of the MC Mining group’s employees and its contractors is a priority and
measures previously implemented to restrict the spread of COVID-19 remain in place. During the
quarter, two Uitkomst employees tested positive for the virus (FY2022 Q1: 14 positive tests). One
positive COVID-19 case was reported at the Makhado Project and no cases were recorded at the Vele
or GSP projects.
Uitkomst Colliery – Utrecht Coalfields (70% owned)
One LTI recorded during the quarter (FY2022 Q1: two LTIs).
The Uitkomst Colliery generated 107,188t of ROM coal during the quarter, 2% lower than the
comparative Q2 FY2021 (108,945t). The marginal decline is attributable to the suspension of mining
for three shifts following production constraints at Uitkomst’s explosives supplier, resulting in three
lost underground mining shifts reducing ROM coal production of approximately 3,000t.
Operational challenges at Uitkomst’s largest customer from early November 2021 led to sales of high
grade duff and peas being 40% lower than the FY2021 comparative period (43,280t vs. 72,656t), with
prior year volumes augmented by the disposal of coal stockpiles. Uitkomst had 10,909t of high grade
duff and peas on hand at the end of the quarter compared to 1,727t at the beginning of the quarter
and the colliery also sold 5,783t of high ash middlings coal during the quarter (FY2021 Q2: 8,830t).
Uitkomst’s high quality coal remains in demand and the colliery secured a customer for 10,000t of the
closing stock. The customer paid a deposit of R6.6 million ($0.4 million) in December 2021 and
commenced uplifting the coal in January 2022. Uitkomst presold 16,500t of coal during the previous
quarter, realising R29.7 million ($1.9 million). During the quarter Uitkomst delivered a further 5,500t
of coal against this contract with the remaining 8,250t to be delivered between January and March
2022.
Demand for commodities continued during the three months with continued improvement in the API4
export coal prices. Average API4 prices for the three months were 123% higher than the comparative
period ($163/t vs $73/t) and Uitkomst’s average revenue per tonne increased by 68% to $111/t
(FY2021 Q2: $66/t) with the sales mix also including lower value, fixed price arrangements. The
significant reduction in sales volumes in the quarter accounted for approximately 75% of the increase
in production costs per saleable tonne during the quarter (FY2022 Q2: $98/t vs. FY2021 Q2: $48/t)
with higher labour, mining, processing and engineering costs also contributing and cost optimization
initiatives are being investigated.
Quarter to Quarter to
end-Dec end-Dec
2021 2020 %?
Production tonnages
Uitkomst ROM (t) 107,188 108,945 (2%)
Sales tonnages
High quality duff and peas (t) 43,280 72,656 (40%)
Middlings sales (t) 5,783 8,830 (35%)
49,063 81,486 (40%)
Quarter financial metrics
Revenue/t ($) 111 66 68%
Revenue/t (ZAR) 1,720 1,029 67%
Production cost/saleable tonnes ($)^ 98 48 104%
^ costs are all South African Rand based
Makhado Hard Coking Coal Project – Soutpansberg Coalfield (67% owned post Black Economic
Empowerment transaction)
The fully permitted Makhado Project recorded no LTIs (FY2022 Q1: nil) during the quarter.
MC Mining’s flagship Makhado Project has favourable economics and its development is expected to
deliver positive returns for shareholders and will position the Company as South Africa’s pre-eminent
hard coking coal (HCC) producer. The IDC which holds a 6.7% equity interest in Baobab Mining &
Exploration (Pty) Ltd (Baobab), the owner of Makhado, remains committed to the Company’s growth.
Subsequent to the end of the quarter, the IDC agreed to extend the date for repayment of the existing
R160 million ($10.3 million) loan plus interest as well as to extend the terminal draw down date in
respect of the conditional R245 million ($15.8 million) term loan facility for the development of the
Makhado Project, to 30 November 2022. In the unlikely event that the Company does not repay the
existing loan by the repayment date, the financing documentation allows for the debt to be converted
into equity.
During January 2019, Baobab completed the acquisition of the Lukin and Salaita properties, being the
key surface rights for the Makhado Project. The balance of the purchase price of R35 million ($2.2
million) (plus interest) (the Deferred Payment) was payable by Baobab on 10 January 2022. The
Company paid an instalment of R6 million ($0.4 million) on 12 January 2022 which will be deducted
from the Deferred Payment, and the vendor agreed to extend the due date for payment of the
balance, to 28 February 2022. MC Mining is currently resolving the funding required for the Deferred
Payment and interest on the unpaid Deferred Payment will accrue at the effective annual rate of
15.2% from 10 January 2022.
The Company continues to work with Baobab and its advisers to complete the funding requirement
for development of the Makhado Project. A further announcement will be made in due course, as and
when applicable.
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 (FY2022 Q1: nil). The Vele processing plant is to be refurbished and recommissioned
as part of Phase 1 development of the Makhado Project.
Greater Soutpansberg Project (GSP)– Soutpansberg Coalfield (74% owned)
GSP recorded no LTIs (FY2022 Q1: nil) during the quarter and no reportable activities occurred during
the period.
Markets
The demand for coal continued during the quarter, leading to a rise in the price of quality South African
export thermal coal with average API4 prices improving to $163/t compared to $73/t recorded in Q2
FY2021 (FY2022 Q1: $139/t). Demand for hard coking coal also increased with average prices of $368/t
compared to $111/t in Q2 FY2021.
Directorate changes
Appointment of Mr Junchao Liu as a Non-Executive Director of MC Mining following the retirement of
long standing Non-Executive Director Mr Shangren Ding. Mr Liu is the Board representative of Haohua
Energy International (Hong Kong) Co. Ltd (HEI), MC Mining’s largest shareholder. Mr Liu is the Deputy
Director of Business Development of Beijing Haohua Energy Resource Company and Deputy General
Manager of HEI.
Appendix 5B – Quarterly Cash Flow Report
The cash balance as at 31 December 2021 was $1.9 million with a further $1.3 million of available
facilities. The aggregate amount of payments to related parties and their associates as disclosed at
item 6.1 of the December quarter Appendix 5B was $63k, comprising executive director remuneration.
In order to meet its working capital requirements, the Group is exploring and progressing on several
alternative strategies to raise additional funding including, but not limited to:
- The issue of new equity for cash in the Company to current and new shareholders, of which the
MC Mining Group has a demonstrated history of success in this regard;
- The issue of new equity for cash in subsidiary companies which own the Makhado Project;
- Further debt funding;
- Further contractor BOOT (build, own, operate, transfer) funding arrangements; and
- The sale of a minority stake in the subsidiary companies holding the Makhado Project.
The Group also has the capacity if necessary to reduce its operating cost structure in order to minimise
its working capital requirements and defer the timing of any future capital raising. The conclusion of
the debt and equity raise is by its nature an involved process and is subject to successful negotiations
with the external funders and shareholders. Any equity raise is likely to be subject to a due diligence
process. The Group has a history of successful capital raisings to meet the Group's funding
requirements.
Sam Randazzo
Chief Executive Officer
This announcement has been approved by the Company’s Disclosure Committee.
All figures are in South African rand or United States dollars unless otherwise stated.
For more information contact:
Sam Randazzo CEO +61 408
Tony Bevan Company Endeavour Corporate 945010
Secretary Services +61 08 9316
9100
Company advisors:
James Harris / James Nominated Strand Hanson +44 20 7409
Dance Adviser Limited 3494
Rory Scott Broker (AIM) Tennyson Securities +44 20 7186
9031
James Duncan Financial PR R&A Strategic +27 11 880
(South Africa) Communications 3924
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 and thermal coal), Makhado Project (hard
coking coal), Vele Colliery (semi-soft coking and thermal coal), and the Greater Soutpansberg Projects (coking and
thermal coal).
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.
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
does 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
Project during
Name Tenement Number Location Interest quarter
Chapudi Albert 686 MS Limpopo~ 4%
Project* Bergwater 712 MS 74%
Remaining Extent and Portion 2 of 74%
Bergwater 697 MS
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of 74%
Bluebell 480 MS
Remaining Extent & Portion 1 of 74%
Bushy Rise 702 MS
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 3 & 4 74%
of Coniston 699 MS
Driehoek 631 MS 74%
Remaining Extent of Dorps-rivier 74%
696 MS
Enfield 512 MS (consolidation of 74%
Remaining Extent 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 74%
Extent of Portion 2, Remaining
Extent of Portion 3, Portions 1,
4, 5, 6, 7 & 8 of Kliprivier 692
MS
Remaining Extent of Koodoobult 74%
664 MS
Koschade 657 MS (Was Mapani Kop 74%
656 MS)
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 74%
Pienaar 635 MS
Remaining Extent & Portion 1 of 74%
Prince's Hill 704 MS
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Change
Project during
Name Tenement Number Location Interest quarter
Remaining Extent & Portion 1 of 74%
Ridge End 662 MS
Remaining Extent & Portion 1 of 74%
Rochdale 700 MS
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 MS 74%
Sandstone Edge 658 MS 74%
Remaining Extent of Portions 2 & 3 74%
of Sterkstroom 689 MS
Sutherland 693 MS 74%
Remaining Extent & Portion 1 of 74%
Varkfontein 671 MS
Remaining Extent, Portion 2, 74%
Remaining Extent of Portion 1 of
Vastval 477 MS
Vleifontein 691 MS 74%
Ptn 3, 4, 5 & 6 of Waterpoort 695 74%
MS
Wildebeesthoek 661 MS 74%
Woodlands 701 MS 74%
Kanowna M27/41 Coolgardie^ Royalty<>
West & M27/47 Royalty<>
Kalbara M27/59 Royalty<>
M27/72,27/73 Royalty<>
M27/114 Royalty<>
M27/196 Royalty<>
M27/181 6.79%
M27/414,27/415 Royalty<>
P27/1826-1829 Royalty<>
P27/1830-1842 Royalty<>
P27/1887 Royalty<>
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 889 MS 69%#
Windhoek 900 MS 69%#
Generaal Beck 568 MS Limpopo~ 74%
Project* Bekaf 650 MS 74%
Remaining Extent & Portion 1 of 74%
Boas 642 MS-
Chase 576 MS 74%
Change
Project during
Name Tenement Number Location Interest quarter
Coen Britz 646 MS 74%
Fanie 578 MS 74%
Portions 1, 2 and Remaining Extent 74%
of Generaal 587 MS
Joffre 584 MS 74%
Juliana 647 MS 74%
Kleinenberg 636 MS 74%
Remaining Extent of Maseri Pan 74%
520 MS
Remaining Extent and Portion 2 of 100%
Mount Stuart 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 100%
Terblanche 155 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%
Cavan 508 MS 100%
Cohen 591 MS 100%
Remaining Extent, Portions 1 & 2 of 74%
Delft 499 MS
Dreyer 526 MS 74%
Remaining Extent of Du Toit 563 74%
MS
Faure 562 MS 74%
Remaining Extent and Portion 1 of 74%
Goosen 530 MS
Hermanus 533 MS 74%
Jutland 536 MS 100%
Krige 495 MS 74%
Mons 557 MS 100%
Remaining Extent of Otto 560 MS 74%
(Now Honeymoon)
Remaining Extent & Portion 1 of 74%
Pretorius 531 MS
Schalk 542 MS 74%
Stubbs 558 MS 100%
Ursa Minor 551 MS 74%
Change
Project during
Name Tenement Number Location Interest quarter
Van Heerden 519 MS 74%
Portions 1, 3, 4, 5, 6, 7, 8, 9, 74%
Remaining Extent of 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 74%
MS
Voorburg 503 MS 100%
Scheveningen 500 MS 74%
Uitkomst Portion 3 (of 2) of Kweekspruit No. KwaZulu- 70%
Colliery 22 Natal~
and Portion 8 (of 1) of Kweekspruit No. 70%
prospects 22
Remainder of Portion 1 of Uitkomst 70%
No. 95
Portion 5 (of 2) of Uitkomst No. 95 70%
Remainder Portion1 of Vaalbank 70%
No. 103
Portion 4 (of 1) of Vaalbank No. 103 70%
Portion 5 (of 1) of Vaalbank No. 103 70%
Remainder of Portion 1 of 70%
Rustverwacht No. 151
Remainder of Portion 2 of 70%
Rustverwacht No. 151
Remainder of Portion 3 (of 1) of 70%
Rustverwacht No. 151
Portion 4 (of 1) Rustverwacht 70%
No.151
Portion 5 (of 1) Rustverwacht No. 70%
151
Remainder of Portion 6 (of 1) of 70%
Rustverwacht No. 151
Portion 7 (of 1) of Rustverwacht No. 70%
151
Portion 8 (of 2) of Rustverwacht No. 70%
151
Remainder of Portion 9 (of 2) of 70%
Rustverwacht No. 151
Portion 11 (of 6) of Rustverwacht 70%
No. 151
Portion 12 (of 9) of Rustverwacht 70%
No. 151
Portion 13 (of 2) of Rustverwacht 70%
No. 151
Change
Project during
Name Tenement Number Location Interest quarter
Portion 14 (of 2) of Rustverwacht 70%
No. 151
Portion 15 (of 3) of Rustverwacht 70%
No. 151
Portion 16 (of 3) of Rustverwacht 70%
No. 151
Portion 17 (of 2) of Rustverwacht 70%
No. 151
Portion 18 (of 3) of Waterval No. 70%
157
Remainder of Portion 1 of Klipspruit 70%
No. 178
Remainder of Portion 4 of Klipspruit 70%
No. 178
Remainder of Portion 5 of Klipspruit 70%
No. 178
Portion 6 of Klipspruit No. 178 70%
Portion 7 (of 1) of Klipspruit No. 70%
178
Portion 8 (of 1 )of Klipspruit No. 70%
178
Portion 9 of Klipspruit No. 178 70%
Remainder of Portion 10 (of 5) of 70%
Klipspruit No. 178
Portion 11 (of 5) of Klipspruit No. 70%
178
Portion 13 (of 4) of Klipspruit No. 70%
178
Remainder of Portion 14 of 70%
Klipspruit No. 178
Portion 16 (of 14) of Klipspruit No. 70%
178
Portion 18 of Klipspruit No. 178 70%
Portion 23 of Klipspruit No. 178 70%
Remainder of Portion 1 of 70%
Jackalsdraai No. 299
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 70%
No. 414
Remainder of Portion 2 (of 1) of 70%
Jericho A No. 414
Portion 3 (of 1) of Jericho A No. 414 70%
Change
Project during
Name Tenement Number Location Interest quarter
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 Portions of Overvlakte 125 MS Limpopo~ 100%
Colliery (Remaining Extent, 3, 4, 5, 6, 13,
and 14)
prospects Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
Tshikunda Certain portions of Unsurveyed Limpopo~ 60%
State Land known as Mutale
* Form part of the Greater Soutpansberg Projects
~ Tenement located in the Republic of South Africa
^ Tenement located in Australia
#
MC Mining’s interest will reduce to 67% on completion of the 26% Broad Based Black Economic
Empowerment (BBBEE) transaction
<> net smelter royalty of 0.5%
Date: 31-01-2022 09:00:00
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