Wrap Text
Report for the quarter ended 31 March 2020
continued production improvements at Uitkomst Colliery
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 24 April 2020
REPORT FOR THE QUARTER ENDED 31 MARCH 2020
CONTINUED PRODUCTION IMPROVEMENTS AT UITKOMST COLLIERY
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 March 2020, the third 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 and corporate features
- Safety initiatives continued at the high-grade Uitkomst metallurgical and
thermal coal mine (“Uitkomst Colliery” or “Uitkomst”) with one lost-time
injury (“LTI”) recorded during the Quarter (FY2020 Q2: two LTIs);
- The South African Government issued a directive to contain the spread of
the COVID-19 virus,instituting a 21-day national lockdown (the
“Lockdown”),effective midnight Thursday 26 March 2020. This was
subsequently extended to midnight on 30 April 2020 and restrictions will
be slowly eased from 1 May 2020, subject to extreme caution.
- The Lockdown resulted in the Uitkomst Colliery being placed on care and
maintenance and also impacted activities at the Company’s development
projects in the Limpopo province.
- Prior to the 26 March 2020 Lockdown, the Uitkomst Colliery continued to
generate pleasing production trends and run-of-mine (“ROM”) coal
production was 12% higher than the March 2019 period (127,122 tonnes (“t”)
vs. 113,190t);
- Sales of high-grade metallurgical,thermal and high-ash middlings coal
were 4% higher than the comparative period (72,942t vs. 70,271t);
- Composite debt/equity funding initiatives for the Makhado hard coking
coal project (“Makhado Project” or “Makhado”) continued, with funding now
expected to be completed in Q2/Q3 CY2020;
- Vele semi-soft coking and thermal coal colliery (“Vele Colliery” or
“Vele”) 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 when financed; and
- Brenda Berlin was appointed as Acting Chief Executive Officer (“CEO”)
following the resignation of David Brown.
Coal market and financial features
- Average API4 export thermal coal prices for the Quarter of $79/t were 5%
lower than the comparative March 2019 period’s $83/t; and
- Available cash at Quarter-end was $1.8 million ($3.5 million at the end
of December 2019) with restricted cash of $0.03 million.
Brenda Berlin, CEO commented:
“Uitkomst continued to generate pleasing results with coal prices trending
higher than the first half of the current financial year. Even though the
colliery had fewer days’ production in the Quarter than Q3 FY2019, ROM coal
production was 12% higher. The spread of the COVID-19 virus resulted in the
South African Government declaring a Lockdown from 26 March 2020 and key
customers significantly reduced or suspended operations. The Lockdown also
led to the Uitkomst Colliery being placed on care and maintenance and the
Company supports all measures to limit the impact of the virus. Safety of
our people is critical and activities at all of our sites will only resume
when it is safe to do so.
The Lockdown also impacted MC Mining’s corporate office and Makhado, Vele
and GSP sites. We implemented contingency programmes, ensuring key activities
continue remotely in isolated, safe environments. The Company continues to
interact with potential domestic and international capital-providers during
the Lockdown and anticipates that the process to secure the balance of
funding required to commence development of Phase 1 of Makhado will be
completed in Q2/Q3 CY2020 with construction commencing shortly thereafter.”
QUARTERLY COMMENTARY
National Lockdown
The health and safety of the employees is MC Mining’s overriding priority
and the Company follows World Health Organisation guidelines, supplemented
by direction provided by the South African Government. The Lockdown impacted
activities at the Makhado, Vele and Greater Soutpansberg Projects (“GSP”) as
well as the Company’s corporate office and resulted in Uitkomst being placed
on care and maintenance from 27 March 2020. The Company has implemented its
business continuity measures as well as enacted procedures to protect the
health and safety of all of its people,including health monitoring,
training, hygiene and security controls.
The Lockdown also resulted in MC Mining having to implement a ‘no work, no
pay’ policy for non-essential staff. Following this and subsequent to the
end of the Quarter, the Company successfully applied for a portion of wages
to be paid by the Temporary Employee Relief Scheme. This will reduce the
adverse financial impacts that the Lockdown is having on staff and the funds
will be distributed to eligible employees in April 2020.
The Lockdown was subsequently extended to 30 April 2020 and will be followed
by a phased easing from 1 May 2020, subject to extreme caution, with the
South African Government yet to clarify activities permissible from this
date. The Company continues to monitor the effects of the Lockdown on its
operations as well as critical suppliers and customers. The Uitkomst Colliery
is a mechanised underground operation and it will be possible to ramp-up to
steady state production levels within a relatively short timeframe once the
Lockdown period is over and key suppliers and customers have recommenced
operations.
Uitkomst Colliery – Utrecht Coalfields (70% owned)
The continued focus on safety contributed to the improved performance at
Uitkomst and the colliery recorded one LTI during the Quarter (FY2020 Q2:
two LTIs).
The production improvement initiatives previously implemented at Uitkomst
continued to yield results and ROM coal production was 12% higher than the
comparative period (127,122t vs 113,190t), despite the loss of approximately
8,000 tonnes of ROM coal production due to the Lockdown. Sales for the
Quarter of high-grade metallurgical and thermal coal were 64,264t (FY2019
Q3: 61,956t) while 8,678t of high-ash middlings coal were sold (FY2019 Q3:
8,315t).
Average API4 thermal coal prices for the Quarter improved on H1 FY2020 prices
but remained 5% lower than the comparative period in 2019 ($79/t vs $83/t).
The lower coal prices contributed to revenue per tonne falling 8% ($69/t vs.
$75/t) while production costs were also lower, reducing from $50/t to $37/t,
benefitting from improved ROM coal production, enactment of further cost
control measures and a 10% weakening of the ZAR:US$ exchange rate.
Quarter to Quarter to
end-Mar 2020 end-Mar 2019 %change
Production tonnages
Uitkomst ROM (t) 127 122 113 190 12%
Sales tonnages
Own ROM (t) 64 264 61 956 4%
Middlings sales 8 678 8 315 4%
72 942 70 271 4%
Quarter financial metrics
Revenue/t ($) 69.33 75.20 (8%)
Revenue/t (ZAR) 1 064 1 054 1%
Production cost/ROM tonnes
36.70 50.17 (27%)
($)^
^ costs are all South African Rand based
The Uitkomst Colliery has an estimated 15-year life-of-mine (“LOM”) which
includes the development of a north adit (horizontal shaft). The colliery is
in the process of 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 Q2: nil) during
the Quarter.
MC Mining’s flagship Makhado Project has very favourable economics and its
phased development will deliver positive returns for shareholders. Makhado
has a LOM in excess of 46 years and construction of the project will position
MC Mining as South Africa’s pre-eminent hard coking coal (“HCC”) producer.
The construction of Makhado Phase 1 comprises the development of the west
pit and modifications to the existing Vele Colliery processing plant. The
Company concluded the initial step in the Phase 1 composite debt/equity
funding process when it secured a conditional R245 million ($14.0 million)
term loan facility from the Industrial Development Corporation of South
Africa Limited. During the Quarter the Company advanced various initiatives
to raise the balance of the funding required. This included positive
discussions with debt providers, current shareholders and potential new
shareholders at both group and project level. MC Mining anticipates that
this will be completed in Q2/Q3 CY2020, following the ending of the Lockdown.
Phase 1 has a nine-month construction period with first coal sales in month
10.
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 Q2: 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 Q2: nil) during the Quarter.
The GSP comprises the Chapudi, Mopane and Generaal areas that are MC Mining’s
longer-term coking and thermal coal projects.There were no further
developments to report during the Quarter.
Markets
The slowdown in the global economy during CY2019 resulted in a decline in
metallurgical and thermal coal prices. However, average premium HCC prices
improved to $149/t during the Quarter, 8% higher than the preceding December
2019 period (FY2019 Q3: $203/t). Demand for South African coal remained
robust and the average API4 price for the Quarter was $79/t, slightly lower
than the $83/t recorded in Q3 FY2019 (FY2020 Q2: $76/t).
Corporate
Brenda Berlin, the Company’s Chief Financial Officer was appointed Acting
CEO during the Quarter. This followed the resignation of David Brown as CEO
and executive director.
Brenda Berlin
Chief Executive Officer
This announcement has been approved by the Company’s Disclosure Committee.
This announcement is inside information for the purposes of Article 7 of
Regulation 596/2014.
For more information contact:
Brenda Berlin Chief Executive MC Mining Limited +27 10 003
Officer 8000
Tony Bevan Company Endeavour +61 08 9316
Secretary Corporate Services 9100
Company advisors:
Ross Allister/David Nominated Peel Hunt LLP +44 20 7418
McKeown Adviser and 8900
Broker
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 coal), Makhado Project (hard coking coal).
Vele Colliery (semi-soft coking and thermal coal), and the Greater
Soutpansberg Projects (coking and thermal coal).
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~ 74%
Project* Bergwater 712 MS 74%
Remaining Extent and Portion 74%
2 of Bergwater 697 MS
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 74%
of Bluebell 480 MS
Remaining Extent & Portion 1 74%
of Bushy Rise 702 MS
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 74%
3 & 4 of Coniston 699 MS
Driehoek 631 MS 74%
Remaining Extent of Dorps- 74%
rivier 696 MS
Enfield 512 MS (consolidation 74%
of Remaining Extent of
Enfield 474 MS, Brosdoorn 682
MS & Remaining Extent of
Grootvlei 684 MS)
Remaining Extent and Portion 74%
1 of
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 74%
Koodoobult 664 MS
Koschade 657 MS (Was Mapani 74%
Kop 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 74%
of Pienaar 635 MS
Remaining Extent & Portion 1 74%
of Prince's Hill 704 MS
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Remaining Extent & Portion 1 74%
of Ridge End 662 MS
Change
Project during
Name Tenement Number Location Interest Quarter
Remaining Extent & Portion 1 74%
of Rochdale 700 MS
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 74%
MS
Sandstone Edge 658 MS 74%
Remaining Extent of Portions 74%
2 & 3 of Sterkstroom 689 MS
Sutherland 693 MS 74%
Remaining Extent & Portion 1 74%
of 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 74%
695 MS
Wildebeesthoek 661 MS 74%
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 74%
of Boas 642 MS-
Chase 576 MS- 74%
Coen Britz 646 MS- 74%
Fanie 578 MS- 74%
Portions 1, 2 and Remaining 74%
Extent of Generaal 587 MS-
Joffre 584 MS- 74%
Change
Project during
Name Tenement Number Location Interest Quarter
Juliana 647 MS 74%
Kleinenberg 636 MS- 74%
Remaining Extent of Maseri 74%
Pan 520 MS-
Remaining Extent and Portion 100%
2 of 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 1 100%
of 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 74%
& 2 of Delft 499 MS-
Dreyer 526 MS-- 74%
Remaining Extent of Du Toit 74%
563 MS-
Faure 562 MS 74%
Remaining Extent and Portion 74%
1 of Goosen 530 MS --
Hermanus 533 MS- 74%
Jutland 536 MS-- 100%
Krige 495 MS- 74%
Mons 557 MS- 100%
Remaining Extent of Otto 560 74%
MS (Now Honeymoon)-
Remaining Extent & Portion 1 74%
of Pretorius 531 MS-
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, 74%
9, 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
Change
Project during
Name Tenement Number Location Interest Quarter
Remaining Extent of Verdun 74%
535 MS-
Voorburg 503 MS— 100%
Scheveningen 500 MS- 74%
Uitkomst Portion 3 (of 2) of KwaZulu- 70%
Colliery Kweekspruit No. 22 Natal~
and Portion 8 (of 1) of 70%
prospects Kweekspruit No. 22
Remainder of Portion 1 of 70%
Uitkomst No. 95
Portion 5 (of 2) of Uitkomst 70%
No. 95
Remainder Portion1 of 70%
Vaalbank No. 103
Portion 4 (of 1) of Vaalbank 70%
No. 103
Portion 5 (of 1) of Vaalbank 70%
No. 103
Remainder of Portion 1 of 70%
Rustverwacht No. 151
Remainder of Portion 2 of 70%
Rustverwacht No. 151
Remainder of Portion 3 (of 1) 70%
of Rustverwacht No. 151
Portion 4 (of 1) Rustverwacht 70%
No.151
Portion 5 (of 1) Rustverwacht 70%
No. 151
Remainder of Portion 6 (of 1) 70%
of Rustverwacht No. 151
Portion 7 (of 1) of 70%
Rustverwacht No. 151
Portion 8 (of 2) of 70%
Rustverwacht No. 151
Remainder of Portion 9 (of 2) 70%
of Rustverwacht No. 151
Portion 11 (of 6) of 70%
Rustverwacht No. 151
Portion 12 (of 9) of 70%
Rustverwacht No. 151
Portion 13 (of 2) of 70%
Rustverwacht No. 151
Portion 14 (of 2) of 70%
Rustverwacht No. 151
Portion 15 (of 3) of 70%
Rustverwacht No. 151
Portion 16 (of 3) of 70%
Rustverwacht No. 151
Portion 17 (of 2) of 70%
Rustverwacht No. 151
Change
Project during
Name Tenement Number Location Interest Quarter
Portion 18 (of 3) of Waterval 70%
No. 157
Remainder of Portion 1 of 70%
Klipspruit No. 178
Remainder of Portion 4 of 70%
Klipspruit No. 178
Remainder of Portion 5 of 70%
Klipspruit No. 178
Portion 6 of Klipspruit No. 70%
178
Portion 7 (of 1) of 70%
Klipspruit No. 178
Portion 8 (of 1 )of 70%
Klipspruit No. 178
Portion 9 of Klipspruit No. 70%
178
Remainder of Portion 10 (of 70%
5) of Klipspruit No. 178
Portion 11 (of 5) of 70%
Klipspruit No. 178
Portion 13 (of 4) of 70%
Klipspruit No. 178
Remainder of Portion 14 of 70%
Klipspruit No. 178
Portion 16 (of 14) of 70%
Klipspruit No. 178
Portion 18 of Klipspruit No. 70%
178
Portion 23 of Klipspruit No. 70%
178
Remainder of Portion 1 of 70%
Jackalsdraai No. 299
Remainder of Jericho B No. 70%
400
Portion 1 of Jericho B No. 70%
400
Portion 2 of Jericho B No. 70%
400
Portion 3 of Jericho B No. 70%
400
Remainder of Jericho C No. 70%
413
Portion 1 of Jericho C No. 70%
413
Remainder of Portion 1 of 70%
Jericho A No. 414
Remainder of Portion 2 (of 1) 70%
of Jericho A No. 414
Portion 3 (of 1) of Jericho A 70%
No. 414
Change
Project during
Name Tenement Number Location Interest Quarter
Portion 4 (of 1) of Jericho A 70%
No. 414
Portion 5 (of 2) of Jericho A 70%
No. 414
Portion 6 (of 1) of Jericho A 70%
No. 414
Margin No. 420 70%
Vele Portions of Overvlakte 125 MS Limpopo~ 100%
Colliery (Remaining Extent, 3, 4, 5,
and 6, 13, 14)
prospects Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
Tshikunda Certain portions of Limpopo~ 60%
Unsurveyed State Land known
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 Black Economic Empowerment (BBBEE) transaction
Date: 24-04-2020 08:00:00
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