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Financial report for the half-year ended 31 December 2017
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
FINANCIAL REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
CORPORATE DIRECTORY
REGISTERED OFFICE Suite 8, 7 The Esplanade
Mt Pleasant, Perth, WA 6153
Telephone: +61 8 9316 9100
Facsimile: +61 8 9316 5475
Email: perth@mcmining.co.za
SOUTH AFRICAN OFFICE South Block
Summercon Office Park
Cnr Rockery Lane and Sunset Avenue
Lonehill
Telephone: +27 10 003 8000
Facsimile: +27 11 388 8333
BOARD OF DIRECTORS Non-executive
Bernard Pryor (Chairman)
Andrew Mifflin
Khomotso Mosehla
Peter Cordin
Rudolph Torlage
Shangren Ding
Thabo Mosololi
Executive
David Brown
DeWet Schutte (resigned 30 November 2017)
COMPANY SECRETARY Tony Bevan
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
AUDITORS Deloitte Touche Tohmatsu N/A Deloitte & Touche
Tower 2 Deloitte Place
Brookfield Place Building 1
123 St Georges Terrace The Woodlands
Perth WA 6000 20 Woodlands Drive
Australia Woodmead 2052
South Africa
BANKERS National Australia Bank Limited Investec Bank plc ABSA Bank
Level 1, 1238 Hay Street 2 Gresham Street The Podium
West Perth WA 6005 London EC2V 7QP Norton Rose Building
Australia United Kingdom 15 Alice Lane
Sandton South Africa
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
BROKERS Euroz Securities Limited Mirabaud N/A
Level 18, Alluvion 21 St James' Street
58 Mounts Bay Road London SW1Y 4JP
Perth WA 6000 United Kingdom
Australia
LAWYERS Squire Patton Boggs (AU) Squire Patton Boggs (UK) Edward Nathan
Sonnenbergs
LLP
Level 21 2 Park Lane 150 West Street
300 Murray Street Leeds Sandton
Perth WA 6000 LS3 1 ES Johannesburg 2196
Australia United Kingdom South Africa
NOMAD/ N/A Peel Hunt LLP Investec Bank Limited
CORPORATE
SPONSOR Moor House 100 Grayston Drive
120 London Wall Sandown 2196
London EC2Y 5ET Johannesburg
United Kingdom South Africa
MC MINING LIMITED
DIRECTORS' REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
The Directors of MC Mining Limited ("MC Mining" or "the Company"), formerly Coal of Africa Limited, submit herewith the
financial report of MC Mining and its subsidiaries ("the Group") for the half-year ended 31 December 2017. All amounts are
expressed in US dollars unless stated otherwise.
In order to comply with the provision of the Corporations Act 2001, the directors report as follows:
Directors
The names of the directors of the company during or since the end of the half-year are:
Bernard Pryor* (Chairman) Shangren Ding*
Andrew Mifflin* Thabo Mosololi*
Khomotso Mosehla* David Brown**
Peter Cordin* DeWet Schutte**
Rudolph Torlage
* - Non-executive director
** - Executive director
DeWet Schutte resigned on 30 November 2017. All other directors held office during and since the end of the previous financial year.
Review of Operations
Principal activity and nature of operations
The principal activity of the Company and its subsidiaries is the mining, exploration and development of coking and thermal
coal properties in South Africa.
The Company's principal assets and projects include:
- Uitkomst Colliery, a high grade thermal colliery ("Uitkomst");
- Makhado Project, a coking and thermal coal exploration and evaluation project("Makhado Project" or "Makhado") ; and
- Vele Colliery, on care and maintenance, a coking and thermal colliery ("Vele Colliery"); and
- Three exploration stage coking and thermal coal projects, namely Chapudi, Generaal, and Mopane, in the Soutpansberg
Coalfield (collectively the "GSP Project").
The Company's focus on safety continued and no lost time incidents ("LTIs") were recorded during the six months under review
(FY2017 H1: nil).
Uitkomst Colliery - Newcastle (Utrecht) (100% owned)
Effective 30 June 2017, the Company acquired a 91% interest in Uitkomst, with the remaining 9% held
by broad-based Black Economic Empowerment ("BEE") trusts, including employees and communities. The Uitkomst Colliery
employs approximately 573 employees (including contractors) and reported no LTIs during the period.
Uitkomst comprises the existing underground coal mine and a planned life of mine ("LOM") extension directly to the north of
current operations, totalling 16 years remaining LOM. The LOM extension requires the development of a north adit (horizontal
shaft) and the colliery has applied for an amendment of its Integrated Water Use Licence ("IWUL") prior to commencing this
expansion. Uitkomst sells sized coal (peas) products with the 0 to 40mm product sold into the domestic metallurgical market
for use as pulverised coal while the peas are supplied to local energy generation facilities. Uitkomst's marketing strategy
ensures that the colliery is positioned to take advantage of higher international coal prices with exposure to both South African
rand and US dollar denominated sales.
Production tonnages for the period were 346,336 tonnes, consisting of 265,609 tonnes of Uitkomst tonnes and 80,727 tonnes
of purchased run of mine ("ROM") to blend. Sales tonnages were 308,275 tonnes, consisting of 174,948 tonnes of Uitkomst
ROM and 53,690 tonnes of slurry used for blending and 79,637 of purchased ROM coal to blend. Revenue for
the period was $17 million with a gross profit of $2.7 million.
In order to meet the requirements of the South African Mining Charter, the Company is in the process of selling an additional
21% interest in Uitkomst to BEE shareholders on a vendor finance basis. The transaction is expected to be concluded
prior to the 30 June 2018 financial year end.
Mooiplaats Thermal Coal Colliery � Ermelo Coalfield (sold during the period)
On 2 November 2017, the Mooiplaats Colliery ("Mooiplaats"), which was on care and maintenance, was sold to Mooiplaats
Coal Holdings Proprietary Limited ("MCH").
The Mooiplaats Colliery recorded no LTIs prior to its sale (FY2017 H1: nil).
Mooiplaats, an underground colliery was developed by MC Mining with the first coal extracted in 2009 but due to the reduction
in thermal coal prices, increasing logistics costs and sub-optimal production rates, was placed under care and maintenance
in October 2013. During the period, the Company agreed to sell the Mooiplaats equity and claims to a consortium of investors,
MCH, for $12.9 million (ZAR179.9 million). The purchase price will be settled as follows:
- $4.8 million (R67.0 million) paid on transaction closing date, namely 2 November 2017, of which
$1.1 million (ZAR15.0 million) was paid to Mooiplaats' BEE partner, Ferret Mining & Environmental Services (Proprietary)
Limited ("Ferret"), in full and final settlement of their equity; and
- The balance of the purchase price, being $8.1 million (ZAR112.9 million) to be settled in ten equal quarterly instalments
(the "Deferred Payments"), subject to the timing of the incorporation of Portions 2, 3 and the remaining extent of the
farm Klipbank 295 IT into the Mooiplaats Colliery New Order Mining Right ("NOMR").
The Deferred payments of $8.1 million (ZAR112.9 million) have been present valued to an amount of $6.6 million at 2
November 2017, to account for the time value of money.
The sale is a culmination of the Company's strategy to restructure its Statement of Financial Position and the proceeds will
support MC Mining's project pipeline and develop its flagship Makhado Project and reduce overhead expenditure.
Makhado Coking Coal Project (95% owned)
The MC Mining Board approved the revised evaluation plan for the Makhado 'Lite' project in September 2017 facilitating the
unlocking of near-term shareholder value from the Company's flagship project by reducing capital expenditure and shortening
the construction period. The revised strategy anticipates that Makhado will be constructed in 12 months, with a 46 year LOM
and potential for future expansion of mining and processing if appropriate. The project has all the regulatory permits required
to commence mining and requires access to the key Lukin and Salaita farms to confirm geotechnical information prior to the
construction of the Makhado colliery. These properties are subject to the South African government's land claims processes
and final resolution of this matter remained outstanding at 31 December 2017 and, the Company anticipates that this will be
resolved in H2 FY2018.
During the period, the Company engaged independent mining experts Minxcon (Pty) Ltd ("Minxcon") to complete a Competent Persons Report
on the Makhado Project and the results received confirmed Makhado's significant near-term value. The Company also continued
hard coking and export thermal coal off-take discussions with various parties and expects that a substantial portion of
Makhado's hard coking coal will be sold locally with the balance sold on international markets.
Vele Colliery - Limpopo (Tuli) Coalfield (100% owned)
The Vele Colliery recorded no LTIs during the period.
The original Vele Colliery IWUL was renewed in January 2016 for a further 20 years, and also amended in line with the
requirements for the Plant Modification Project ("PMP") at the colliery.
Post the period end, in February 2018, the South African Department of Water and Sanitation granted the IWUL amendment,
completing the suite of regulatory authorisations required for the Vele Colliery. The final decision on whether to proceed with
the PMP will be placed before the Company's Board, which will include an assessment of long term pricing as well as logistics considerations.
As at the end of December 2017, given the changes in certain macroeconomic conditions (the ZAR/USD exchange rate) the carrying value of the
asset was assessed. In terms of AASB 136 - Impairment of Assets, management have identified this as an indicator that the Vele assets may
be impaired and have performed a formal impairment assessment. Furthermore, the shift in the Company's strategic focus to prioritise the
Makhado project and to delay the redevelopment of the Vele project to better align with the timing of the South African Government gazetted
Musina-Makhado Special Economic Zone ("SEZ") in Limpopo. This has resulted in the forecast production date for the Vele project being delayed
by 2 years.
Management have adopted the fair value less costs of disposal approach to estimate the recoverable amount of the project,
before comparing this amount with the carrying value of the associated assets and liabilities in order to assess whether an
impairment of the carrying value is required under AASB 136. Due to the carrying amount being greater than the recoverable
value of the Vele Colliery, an impairment charge of $87.5 million has been recognised during the half year ended 31 December
2017. Refer to note 13 for details of the impairment assessment.
Greater Soutpansberg Project (MbeuYashu) (74% owned)
The GSP Project recorded no LTIs during the period.
Corporate
MC Mining has made significant progress in the restructuring of its Statement of Financial Position, positioning the Company
to unlock shareholder value. At the November 2017 Annual General Meeting ("AGM") shareholders approved, by special
resolution requiring at least 75% support, the re-naming of the Company to reflect its potential growth, particularly of its hard
coking (metallurgical) coal prospects and as a result, the Company changed its name to 'MC Mining Limited'. The change of
name appropriately recognises the Company's geographic and operational focus, namely the development and mining of high
quality metallurgical coal projects in Southern Africa.
The settlement of all material legacy issues resulted in MC Mining's Directors assessing the disproportionately large number
of shares in issue due to historical equity-based capital raisings and shareholders approved a 20 for one consolidation of the
Company's issued capital at the AGM, presenting an opportunity to better endorse the MC Mining to the wider investment community.
The change of name and share consolidation were completed in December 2017 and resulted in a change in the Company's
ticker on the Australian Securities Exchange and AIM Market of the London Stock Exchange to 'MCM', while the Company's
shares trade under the MCZ ticker on the Johannesburg Stock Exchange ("JSE"), all utilising International Securities Identification
Number AU000000MCM9.
Financial review
The loss for the six months under review was $97.33 million or 78.39 cents per share compared to a loss of $12.97 million, or
0.68 cents per share for the prior corresponding period.
The loss for the period under review of $97.33 million (2016: $12.97 million) includes:
- revenue of $17.0 million (2016: NIL) and cost of sales of $14.36 million (2016: NIL), resulting in a gross profit of $2.7 million (2016: NIL)
- an impairment of the Vele assets of $87.5 million
- reversal of prior year impairments on the sale of Mooiplaats of $3.1 million
- in the comparative period, intangible assets were impaired by $10.6 million due to the Company deciding not to renew its
agreement with Terminal de Carvao da Matola ("TCM"), the entity that granted the Company port capacity through the
Matola terminal until 2028
- de-recognition of the deferred tax asset relating to Vele of $5.6 million and income tax expense of $1.3 million
- net foreign exchange losses of $1.3 million (2016: gain of $2.9 million) arising from the translation of inter-group loan
balances, borrowings and cash due to changes in the ZAR:USD and AUD:USD exchange rates during the period;
- employee benefit expense of $3.9 million (2016 expense: $2.5 million)
- other expenses of $2.7 million (2016: $2.3 million)
- depreciation of $0.2 million (2016: $0.2 million) and amortisation of NIL (2016: $0.4 million).
As at 31 December 2017, the Company had cash and cash equivalents of $10.2 million compared to cash and cash equivalents
of $9.6 million at 30 June 2017.
Authorised and issued share capital
MC Mining finalised a share consolidation of 20:1 on 6 December 2017 reducing the number of shares to 140,879,585 post
consolidation. The holders of ordinary shares are entitled to one vote per share and are entitled to receive dividends when
declared.
Dividends
No dividends were declared or paid during the six months.
Highlights and events after the reporting period
No events occurred after the reporting period.
Rounding off of amounts
The Company is a company of the kind referred to in ASIC Class Order 98/100, date 10 July 1998, and in accordance with
that Class Order amounts in the directors' report and the half-year financial report are rounded off to the nearest thousand
dollars, unless otherwise indicated.
Auditor's Independence Declaration
The auditor's independence declaration is included on page 28 of the half-year report.
The half-year report set out on pages 8 to 26, which has been prepared on a going concern basis, was approved by the board
on 15 March 2018 and was signed on its behalf by:
Bernard Robert Pryor David Hugh Brown
Chairman Chief Executive Officer
15 March 2018 15 March 2018
Dated at Johannesburg, South Africa, this 15th day of March 2018.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Six months Six months
ended ended
31 Dec 2017 31 Dec 2016
Note $'000 $'000
Continuing operations
Revenue 4 17,036 -
Cost of sales 5 (14,358) -
Gross profit 2,678 -
Other operating income 734 254
Other operating (losses)/gains 6 (992) 2,912
Impairment 13/7 (87,475) (10,620)
Administrative expenses 8 (6,786) (5,056)
Operating loss (91,841) (12,510)
Interest income 376 149
Finance costs (1,664) (595)
Loss before tax (93,129) (12,956)
Income tax (charge)/credit 9 (6,869) 148
Net loss for the period from continuing operations (99,998) (12,808)
Operations held for sale/discontinued operations
Profit/(loss) for the period from operations classified as held for sale 10 2,660 (159)
LOSS AFTER TAX (97,338) (12,967)
Other comprehensive profit/(loss), net of income tax
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 13,358 8,422
Total comprehensive loss for the period (83,980) (4,545)
Loss for the period attributable to:
Owners of the parent (97,259) (12,967)
Non-controlling interests (79) -
(97,338) (12,967)
Total comprehensive loss attributable to:
Owners of the parent (83,901) (4,545)
Non-controlling interests (79) -
(83,980) (4,545)
Loss per share 12
From continuing operations and operations held for sale
Basic and diluted (cents per share) (78.39) (13.68)
From continuing operations
Basic and diluted (cents per share) (80.54) (13.51)
Headline loss per share (10.43) (2.48)
The accompanying notes are an integral part of these condensed consolidated financial statements
The prior period comparatives have been reclassified (refer note 1)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2017
31 Dec 2017 30 June 2017
Note $'000 $'000
ASSETS
Non-current assets
Development, exploration and evaluation assets 13 154,236 232,822
Property, plant and equipment 31,634 30,531
Other receivables 249 237
Other financial assets 7,593 9,171
Loan receivable 10 5,811 -
Restricted cash 14 55 52
Deferred tax assets 15 - 5,713
Total non-current assets 199,578 278,526
Current assets
Inventories 1,020 1,688
Trade and other receivables 8,301 6,107
Loan receivable 10 1,825 -
Tax receivable 277 326
Other financial assets 4 5
Cash and cash equivalents 14 10,173 9,624
21,600 17,750
Assets classified as held for sale 10 107 9,791
Total current assets 21,707 27,541
Total assets 221,285 306,067
LIABILITIES
Non-current liabilities
Deferred consideration 16 2,129 1,916
Borrowings 17 10,029 8,197
Provisions 5,923 7,468
Deferred tax liability 6,414 6,087
Other liabilities 200 -
Total non-current liabilities 24,695 23,668
Current liabilities
Trade and other payables 5,212 4,224
Provisions 574 597
Current tax liabilities 1,788 1,290
7,574 6,111
Liabilities associated with assets held for sale 10 - 3,414
Total current liabilities 7,574 9,525
Total liabilities 32,269 33,193
NET ASSETS 189,016 272,874
EQUITY
Issued capital 18 1,040,950 1,040,950
Accumulated deficit (847,359) (750,100)
Reserves (5,055) (18,535)
Equity attributable to owners of the parent 188,536 272,315
Non-controlling interests 480 559
TOTAL EQUITY 189,016 272,874
The accompanying notes are an integral part of these condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Issued Accumulated Share Capital Warrants Foreign Attributable Non- Total
capital deficit based profits reserve currency to owners of controlling equity
payment reserve translation the parent interests
reserve reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 July 2017 1,040,950 (750,100) 713 91 1,134 (20,473) 272,315 559 272,874
Total comprehensive profit/(loss) for the - (97,259) - - - 13,358 (83,901) (79) (83,980)
period
Loss for the period � continuing operations - (99,919) - - - - (99,919) (79) (99,998)
Profit for the period � operations held for sale - 2,660 - - - - 2,660 - 2,660
Other comprehensive loss, net of tax - - - - - 13,358 13,358 - 13,358
Share based payments - - 283 - - - 283 - 283
Share options forfeited - - (161) - - - (161) - (161)
Share options expired - - - - - - - - -
Balance at 31 December 2017 1,040,950 (847,359) 835 91 1,134 (7,115) 188,536 480 189,016
Balance at 1 July 2016 1,006,435 (736,403) 2,274 91 - (36,530) 235,867 575 236,442
Total comprehensive loss for the period - (12,967) - - - 8,422 (4,545) - (4,545)
Loss for the period � continuing operations - (12,808) - - - - (12,808) - (12,808)
Loss for the period � operations held for sale - (159) - - - - (159) - (159)
Other comprehensive loss, net of tax - - - - - 8,422 8,422 - 8,422
Share based payments - - 174 - - - 174 - 174
Share options cancelled or forfeited - - (117) - - - (117) - (117)
Share options expired - - - - - - - - -
Balance at 31 December 2016 1,006,435 (749,370) 2,331 91 - (28,108) 231,379 575 231,954
The accompanying notes are an integral part of these condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
Six months Six months
ended ended
31 Dec 2017 31 Dec 2016
$'000 $'000
Cash Flows from Operating Activities
Receipts from customers 19,384 73
Payments to employees and suppliers (22,615) (5,300)
Cash used in operations (3,231) (5,227)
Interest received 296 214
Interest paid (102) (14)
Tax paid (802) -
Net cash used in operating activities (3,839) (5,027)
Cash Flows from Investing Activities
Purchase of property, plant and equipment (511) (179)
Payments for exploration and evaluation assets (226) (314)
Net proceeds from sale of Mooiplaats Colliery 2,315 -
Decrease/(increase) in other financial assets 1,946 (703)
Payments for development assets (2) -
Net cash generated/(used in) investing activities 3,522 (1,196)
Cash Flows from Financing Activities
Repayment of deferred consideration - (6,274)
Net cash used in financing activities - (6,274)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (317) (12,497)
Cash and cash equivalents at the beginning of the half-year 9,646 19,742
Foreign exchange differences 844 39
Cash and cash equivalents at the end of the half-year 9 10,173 7,248
The accompanying notes are an integral part of these condensed consolidated financial statements
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR REPORT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2017
1. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act
2001 and AASB 134: 'Interim Financial Reporting'. Compliance with AASB 134 ensures compliance with International
Financial Reporting Standard IAS 34 'Interim Financial Reporting'. The half-year report does not include notes of the
type normally included in an annual financial report and should be read in conjunction with the most recent annual
financial report.
Basis of preparation
The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the
revaluation of financial instruments and assets held for sale. Cost is based on the fair values of the consideration given
in exchange for assets.
All amounts are presented in United States dollars, unless otherwise noted.
The company is of a kind referred to in ASIC Legislative Instrument 2016/191, relating to the 'rounding off' of amounts
in the directors' report. Amounts in the directors' report have been rounded off in accordance with the instrument to the
nearest thousand dollars, or in certain cases, to the nearest dollar.
The accounting policies and methods of computation adopted in the preparation of the half-year financial report are
consistent with those adopted and disclosed in the company's 2017 annual financial report for the financial year ended
30 June 2017, except for the impact of the Standard and Interpretations described below. These accounting policies are
consistent with the Australian Accounting Standards and with International Financial Reporting Standards ("IFRS").
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board ("the AASB") that are relevant to their operations and effective for the current reporting period.
The application of these amendments does not have any material impact on the disclosures or the amounts recognised
in the Group's consolidated financial statements.
Restatement
Change in classification of expenses
During the half year, the Group has changed the method of classification of expenses within the Consolidated Statement
of Profit or Loss and Other Comprehensive Income. Expenses previously classified using the nature of the expenses
are now classified using the function of the expenses.
With the acquisition of the Uitkomst colliery effective 30 June 2017, this method will provide more relevant information
to users of the financial statements and align the Group with common practice within the industry. Prior year
comparatives at 31 December 2016 have been reclassified on this basis with additional information about the nature of
expenses disclosed in note 8.
2. GOING CONCERN
The Consolidated Entity has incurred a net loss after tax for the half year ended 31 December 2017 of $97.3 million (31
December 2016: loss of $12.97 million). The current period loss included a non-cash impairment expense of $87.5
million relating to the Vele Colliery (2016: nil). During the six month period ended 31 December 2017 net cash outflows
from operating activities were $3.8 million (31 December 2016 net outflow: $5.0 million). As at 31 December 2017 the
Consolidated Entity had a net current asset position of $14.1 million (30 June 2017: net current asset position
of $18 million).
The directors have prepared a cash flow forecast for the period ended 31 March 2019, taking into account available
facilities and expected cash flows to be generated by Uitkomst, which indicates that the Consolidated Entity will have
sufficient cash flow to fund their operations for at least the twelve month period from the date of signing this report.
3. SEGMENT INFORMATION
AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group
that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to
assess its performance.
Information reported to the Group's Chief Executive Officer ("CEO") for the purposes of resource allocation and
assessment of performance is more specifically focused on the stage within the mining pipeline that the operation finds
itself in. During the period, the CEO determined that it was more appropriate to review the operating results of the
identified segments and make decisions about resources to be allocated to the segment and assess its performance
from an entity perspective rather than a consolidated perspective. Accordingly, the presentation of the information has
changed from the prior period for total assets. The prior period total assets have been restated to reflect the change.
The Group's reportable segments under AASB 8 are therefore as follows:
- Exploration
- Development
- Mining
The Exploration segment is involved in the search for resources suitable for commercial exploitation, and the
determination of the technical feasibility and commercial viability of resources. As of 31 December 2017, projects within
this reportable segment include three exploration stage coking and thermal coal complexes, namely the Chapudi Complex
(which comprises the Chapudi project, the Chapudi West project and the Wildebeesthoek project), the Soutpansberg
Complex (which comprises the Voorburg project, the Mount Stuart project and the Jutland project) and the Makhado
Complex (comprising the Makhado project, the Makhado Extension project and the Generaal project).
The Development segment is engaged in establishing access to and commissioning facilities to extract, treat and
transport production from the mineral reserve, and other preparations for commercial production. As at 31 December
2017, projects included within this reportable segment includes the Vele Colliery, in the early operational and
development stage and, Klipspruit which is included in Uitkomst Colliery.
The Mining segment is involved in day to day activities of obtaining a saleable product from the mineral reserve on a
commercial scale and consists of Uitkomst Colliery.
The Group evaluates performance on the basis of segment profitability, which represents net operating (loss) / profit
earned by each reportable segment.
Each reportable segment is managed separately because, amongst other things, each reportable segment has
substantially different risks.
The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, i.e. at current
market prices.
The Group's reportable segments focus on the stage of project development and the product offerings of coal mines in
production.
In order to reconcile the segment results with the consolidated statement of profit or loss and other comprehensive
income the operations held for sale should be deducted from the segment total and the corporate results (as per the
reconciliation later in the note should be included).
The following is an analysis of the Group's results by reportable operating segment for the period under review:
For the six months ended 31 December 2017
Exploration Development Mining Total
Revenue - - 17,036 17,036
Cost of sales - - (14,358) (14,358)
Gross Profit 2,678 2,678
Other income - 90 583 673
Administrative expenses (433) (450) (275) (1,158)
Impairment (refer note 13) - (87,475) - (87,475)
Profit and loss before interest (433) (87,835) 2,986 (85,282)
Interest income 10 - 66 76
Finance costs (1,269) (256) (39) (1,564)
(Loss)/profit before tax (1,692) (88,091) 3,013 (86,770)
For the six months ended 31 December 2016
Exploration Development Mining Total
Revenue - - - -
Cost of sales - - - -
Gross loss - - - -
Other operating gains/(losses) 1,076 - - 1,076
Administrative expenses (186) (563) - (749)
Other income - 33 - 33
Profit and loss before interest 890 (530) - 360
Interest income - 7 - 7
Finance costs (534) (59) - (593)
Profit/(loss) before tax 356 (582) - (226)
The following is an analysis of the Group's assets by reportable operating segment:
31 Dec 2017 30 June 2017
$'000 $'000
Exploration 130,111 124,216
Development 30,609 120,406
Mining 33,048 31,016
Total segment assets 193,768 275,638
Reconciliation of segment information to the consolidated financial statements:
31 Dec 2017 31 Dec 2016
$'000 $'000
Total loss for reportable segments (86,770) (226)
Impairment of intangible asset - (10,620)
Other operating (losses)/gains (992) 1,836
Administrative expenses (5,627) (4,307)
Other income 61 221
Interest income 300 143
Finance costs (101) (3)
Loss before tax (93,129) (12,956)
31 Dec 2017 30 June 2017
$'000 $'000
Total segment assets 193,768 275,638
Unallocated property, plant and equipment 4,124 4,118
Other financial assets 5,562 7,311
Long term receivable 5,811 -
Unallocated cash and cash equivalents 9,422
Unallocated current assets 2,598 9,310
Assets classified as held for sale - 9,690
Total assets 221,285 306,067
The reconciling items relate to corporate assets.
4. REVENUE
Revenue consists of the sale of coal by the Uitkomst Colliery.
5. COST OF SALES
Cost of sales consists of:
31 Dec 2017 31 Dec 2016
$'000 $'000
Salaries and wages (1,532) -
Mining contractor (5,757) -
Depreciation and amortisation (600) -
Logistics (1,340) -
Other direct mining costs (2,545) -
Coal purchases (1,738) -
Inventory adjustment (732) -
Other (114) -
(14,358) -
6. OTHER OPERATING GAINS OR (LOSSES)
Other operating gains or losses include:
31 Dec 2017 31 Dec 2016
$'000 $'000
Foreign exchange (loss)/profit
Unrealised (1,643) 3,009
Realised 314 (97)
Other 337 -
(992) 2,912
7. INTANGIBLE ASSETS
In August 2008 the Company entered into a throughput agreement with TCM, a subsidiary of Grindrod, the operator of
the Matola Terminal, and CMR Engineers & Project Managers Proprietary Limited.
This agreement granted the Company one million tonnes per annum ("mtpa") of port capacity through the Matola terminal
commencing 1 January 2009, for an initial term of five years. This capacity was increased to approximately three mtpa
in March 2011 and the Company had the right to renew the agreement (subject to certain conditions) at the end of the
initial term, for further periods of three successive periods of five years each for a total of 15 years.
MC Mining decided not to renew the take or pay obligation beyond 31 December 2016 to avoid any further liabilities until
production can be forecast with certainty, and as a result impaired the intangible asset.
New terms can be negotiated if required to facilitate any production by its Vele Colliery and Makhado Project.
8. ADMINISTRATIVE EXPENSES
31 Dec 2017 31 Dec 2016
$'000 $'000
Employee costs (3,852) (2,541)
Depreciation and amortisation (248) (168)
Transaction costs (601) (403)
Other (2,085) (1,944)
(6,786) (5,056)
9. INCOME TAX (CHARGE)/CREDIT
The tax (charge)/ credit relates to the following
31 Dec 2017 31 Dec 2016
$'000 $'000
Current income tax expense (1,306) -
Deferred tax current year 12 148
Deferred tax asset written-off (refer note 15) (5,575) -
(6,869) 148
10. ASSETS CLASSIFIED AS HELD FOR SALE
31 Dec 2017 30 June 2017
$'000 $'000
Carrying amounts of
Uitkomst Colliery building held for sale 107 101
Assets classified as held for sale
Uitkomst Colliery building held for sale 107 101
Uitkomst
Uitkomst has signed an offer to purchase for the sale of a building for $0.1 million (ZAR1.3 million).
Mooiplaats - discontinued operation
During the period, the Company as well as it's BEE partner Ferret, entered into a sale of shares and claims agreement
("the Agreement") with MCH and Mooiplaats Mining Limited ("Mooiplaats Mining"). In terms of the Agreement, MC Mining and
Ferret disposed of 100% of their shares in Mooiplaats Mining and the Group disposed of its respective claims against
Mooiplaats Mining and its wholly-owned subsidiary Langcarel Proprietary Limited ("the Transaction"), the owner of the
Mooiplaats Colliery. The sale was finalized on 2 November 2017 for an aggregate purchase price of $12.9 million (ZAR179.9 million).
The purchase price will be settled as follows:
- an initial tranche of $4.8 million (ZAR 67 million) on the effective date of sale ($3.7 million (ZAR52 million) to the
Group and $1.1 million (ZAR15 million) to Ferret for full and final settlement of their equity),
- the balance of $8.1 million (ZAR112.9 million) to be settled in not more than 10 quarterly instalments, with the first
Deferred Payment expected to be due in August 2018, to coincide with the timing of the incorporation of Portions
2, 3 and the remaining extent of the farm Klipbank 295 IT into the Mooiplaats Colliery NOMR.
The Deferred Payments of $8.1 million (ZAR 112.9 million) have been present valued to an amount of $6.6 million at
2 November 2017, to account for the time value of money.
Mooiplaats was classified as held for sale as at 30 June 2017 given the plans to dispose of the operations.
The profit/(loss) for the period until the sale of Mooiplaats is analysed as follows:
Period ended Six month
period ended
2 Nov 2017 31 Dec 2016
$'000 $'000
Other gains 3,162 -
- -
Expenses (502) (159)
Profit/(loss) before tax 2,660 (159)
Profit/(loss) for the period from operations held for sale (attributable to owners of the parent) 2,660 (159)
Included in other gains is the reversal of prior year asset impairments of $3.1 million
Cash flows from discontinued operations held for sale
Six months
2 Nov 2017 ended
31 Dec 2016
$'000 $'000
Net cash outflows from operating activities (483) (410)
Net cash inflows/(outflows) from investing activities 1,451 (274)
Net cash inflows from financing activities 513 638
Net cash inflows/(outflows) 1,481 (46)
The major classes of assets and liabilities of Mooiplaats at the effective date of sale were as follows:
2 Nov 2017 30 June 2017
$'000 $'000
Assets classified as held for sale
Property, plant and equipment 8,332 9,407
Other financial assets - 239
Inventories 1 1
Trade and other receivables 234 21
Cash and cash equivalents 1,403 22
9,970 9,690
Liabilities classified as held for sale
Provisions 2,744 2,937
Trade payables and accrued expenses 30 477
2,774 3,414
Net assets classified as held for sale 7,196 6,276
Impairment reversal 3,160 -
Net assets of Mooiplaats 10,356 6,276
Consideration received or receivable:
2 Nov 2017 30 June
2017
$'000 $'000
Cash 3,718 -
Receivable 6,638 -
Total disposal consideration 10,356 -
Carrying value of net assets sold (10,356) -
Gain on sale - -
31 Dec 2017 30 June 2017
$'000 $'000
Present value of loan receivable at 2 November 2017 6,638 -
Unwinding of interest 121 -
Foreign exchange difference 877 -
7,636 -
Current portion of receivable at 31 December 2017 (1,825) -
Long term portion of receivable at 31 December 2017 5,811 -
11. DIVIDENDS
No dividend has been paid or is proposed in respect of the half-year ended 31 December 2017 (2016: Nil).
12. LOSS PER SHARE
31 Dec 2017 31 Dec 2016
12.1 Basic (loss)/profit per share
Cents per Cents per
share share
Basic (loss)/profit per share
From continuing operations (80.54) (13.51)
From discontinued operations 2.15 (0.17)
(78.39) (13.68)
$'000 $'000
Loss for the period attributable to owners of the parent (97,259) (12,967)
(Profit)/loss for the period from operations held for sale (2,660) 159
Loss used in the calculation of basic loss per share from continuing operations (99,919) (12,808)
31 Dec 2017 31 Dec 2016
'000 shares '000 shares
Weighted number of ordinary shares
Weighted average number of ordinary shares for the purposes of basic loss per share 124,068 94,821
The comparative loss per share has been adjusted to reflect the share consolidation completed during the current period
(refer note 18).
12.2 Diluted loss per share
Diluted loss per share is calculated by dividing the loss attributable to owners of the Company by the weighted average
number of ordinary shares outstanding during the year plus the weighted average number of diluted ordinary share that
would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
As at 31 December 2017, 1,250,000 options (2016 � 99,385,85 options) were excluded from the computation of the loss
per share as their impact is anti-dilutive.
12.3 Headline loss per share (in line with JSE listing requirements)
The calculation of headline loss per share at 31 December 2017 was based on the headline loss attributable to ordinary
equity holders of the Company of $12.9 million (2016: $2.3 million) and a weighted average number of ordinary shares
outstanding during the period ended 31 December 2017 of 124,068,424 (2016: 94,820,621 shares post consolidation).
The adjustments made to arrive at the headline loss are as follows:
31 Dec 2017 31 Dec 2016
$'000 $'000
Loss for the period attributable to ordinary shareholders (97,259) (12,967)
Adjust for:
Impairment 87,475 10,620
Asset held for sale impairment reversal (3,160) -
Headline loss (12,944) (2,347)
Headline loss per share (cents per share) (10.43) (2.48)
13. DEVELOPMENT, EXPLORATION AND EVALUATION ASSETS
31 Dec 2016 30 June 2017
$'000 $'000
Development, exploration and evaluation assets comprise:
Exploration and evaluation assets 123,888 118,652
Development assets 30,348 114,170
Balance at end of period 154,236 232,822
A reconciliation of development, exploration and evaluation assets is presented below:
Exploration and evaluation assets
31 Dec 2017 30 June 2017
$'000 $'000
Balance at beginning of period 118,652 104,893
Additions 226 430
Adjustment to rehabilitation asset - (37)
Transfer from development assets - 2,342
Acquisition of Uitkomst - 249
Foreign exchange differences 5,010 10,775
Balance at end of period 123,888 118,652
Development assets
31 Dec 2017 30 June 2017
$'000 $'000
Balance at beginning of period 114,170 103,030
Additions 2 6
Adjustment to rehabilitation asset (2,037) 2,004
Transfer to exploration and evaluation assets - (2,342)
Impairment (87,475) -
Foreign exchange differences 5,688 11,472
Balance at end of period 30,348 114,170
As of 31 December 2017 the net book value of the following project assets post impairment were included in
Development assets:
- Vele Colliery: $30.3 million
During the half year, the Group made the decision to prioritise the Makhado Project and consequently to delay the
redevelopment of the Vele Colliery to better align with the timing of the Musina-Makhado SEZ in Limpopo.
This has resulted in the forecast production date for the Vele Colliery being delayed with production now
expected to commence in July 2021. In terms of AASB 136 � Impairment of Assets, management have identified this
as an indicator that the Vele assets may be impaired and have performed a formal impairment assessment.
The recoverable value of the project has been calculated using the fair value less costs of disposal approach to estimate
the recoverable amount of the project, before comparing this amount with the carrying value of the associated assets
and liabilities in order to assess whether an impairment of the carrying value is required under AASB 136. Due to the
recoverable value being less than the carrying value, an impairment charge of $87.5 million has been recognised during
the half year ended 31 December 2017.
In calculating fair value less costs of disposal, management have forecast the cash flows associated with the project
over its expected life of 15 years until 2037 based on the current life of mine model. The cash flows are estimated for
the assets of the colliery in its current condition together with capital expenditure required for the colliery to resume
operations, discounted to its present value using a post-tax discount rate that reflects the current market assessments of
the risks specific to the Vele Colliery. The identification of impairment indicators and the estimation of future cash flows
require management to make significant estimates and judgments. Details of the key assumptions used in the fair value
less costs of disposal calculation at 31 December 2017 are included below.
Key assumptions
2018 2019 2020 2021 LT
Thermal coal price (USD, nominal)(1) 80 75 69 69 70(2)
Hard coking coal price (USD, nominal)(3) 153 135 129 125 129(4)
Exchange rate (USD / ZAR, nominal) 12.7 12.5 13.2 14.3 15.0(5)
Discount rate(6) 16.75%
Inflation rates USD 2.1%
ZAR 5.1%
Production start date(7) FY 2022
(1) Management's assumptions reflect the Richards Bay export thermal coal (API4) price.
(2) Long-term thermal coal price equivalent to USD 65 per tonne in 2017 dollars.
(3) Management's assumption of the hard coking coal price was made after considering relevant broker forecasts.
(4) Long-term hard coking coal price equivalent to USD 120 per tonne in 2017 dollars.
(5) From 2022, the exchange rate is derived with reference to the 2021 assumption, and inflated by the compounding differential between USD and ZAR
inflation rates. The comparative discount rate applied at 30 June 2017 is 16.1%.
(6) Management prepared a nominal ZAR-denominated, post-tax discount rate, which was calculated with reference to the
Capital Asset Pricing Model (CAPM).
(7) The production start date assumes that sufficient project finance is able to be raised by management in order to commence production in July 2021.
Management is in the early stages of considering the financing options available.
Impairment Assessment
USD million
Carrying Value of Vele Cash Generating Unit 117.8
Recoverable value 30.3
Impairment expense (allocated to development assets) (87.5)
Sensitivity Analysis
Changes in key assumptions in the table below would have the following approximate impact on the recoverable amount of
the Vele Colliery as calculated using the discounted cash flow method and excluding the value attributable to resources
outside the LOM.
Sensitivity Change in variable Effect on fair value less
costs of disposal
Long term coal prices +10.0% 21
-10.0% (24)
Long term exchange rate +10.0% 25
-10.0% (29)
Discount rate +1.0% (2)
-1.0% 2
Operating costs +10.0% (14)
-10.0% 14
Delays in production start date +12 months (4)
14. CASH AND CASH EQUIVALENTS
31 Dec 2017 30 Jun 2017
$'000 $'000
Bank balances 10,173 9,624
Bank balances associated with discontinued operations (refer Note 5) - 22
10,173 9,646
Restricted cash 55 52
55 52
15. DEFERRED TAX ASSETS
The deferred tax asset balance at 30 June 2017 of $5.7 million, relating to the Vele Colliery, has been derecognised with
no additional deferred tax assets being recognized during the period, due to the increased risk of recoverability of the
deferred tax asset through future taxable earnings. This arises from the later commencement date of the Vele mine due
to management's view of development of the SEZ and the prioritization of the Makhado project. The charge to profit and
loss was $5.6 million as a result of foreign exchange differences.
16. DEFERRED CONSIDERATION
The deferred consideration relates to an amount of $2 million (R25 million) included in the acquisition price of $22.2million
(ZAR275 million), payable to Pan African Resources Plc ("Pan African") for the acquisition by the Company of Pan African
Resources Coal Holdings Proprietary Limited, the owner of Uitkomst. The amount bears interest at the South African prime
rate and will be settled on 30 June 2019. The Company is entitled to prepay any amounts in respect of the deferred consideration
at any time until 30 June 2019. To the extent that certain coal buy-in opportunities are not secured by or with the assistance of
Pan African, by 30 June 2019, which could result in MC Mining suffering a lower economic benefit, the deferred
consideration can be reduced by such value, subject to a maximum of $1.2 million (ZAR15 million).
Interest of $0.1 million accrued on the deferred consideration during the period.
17. BORROWINGS
Industrial Development Corporation of South Africa Limited
The Company has a loan agreement (the "Loan Agreement") with the Industrial Development Corporation of South Africa
Limited ("IDC") and Baobab Mining and Exploration Proprietary Limited ("Baobab"), a subsidiary of MC Mining and owner
of the NOMR for the Makhado Project. In terms of the Loan Agreement, the IDC will advance loan funding up to
$19.4 million (ZAR240 million) to Baobab to advance the operations and implementation of the Makhado Project. The
loan funding is to be provided in two equal tranches of $9.7 million (ZAR120 million) upon written request from Baobab.
The first tranche was drawn down in May 2017.
The loan is repayable on the third anniversary of each advance. On the third anniversary, the Company is required to
repay the loan amount plus an amount equal to the after tax internal rate of return equal to 16% of the amount of each advance.
MC Mining is also required to issue warrants, in respect of MC Mining shares, to the IDC pursuant to each advance date
as soon as the relevant shareholder approval is obtained. The warrants for the first draw down equated to 2.5% (equating
to 48,175,033 shares pre the share consolidation (refer note 18) (the post consolidation warrants equate to 2,408,752
warrants)) of the entire issued share capital of MC Mining as at 5 December 2016. The price at which the IDC shall be
entitled to purchase the MC Mining shares is equal to a thirty percent premium to the 30 day volume weighted average
price of the MC Mining shares as traded on the JSE as at 5 December 2016 (ZAR0.60 per share). The IDC is entitled to
exercise the warrants for a period of five years from the date of issue.
Furthermore, upon each advance date, Baobab shall be required to issue new ordinary shares in Baobab to the IDC
equivalent to 5% of the entire issued share capital of Baobab at such time. As a result of the first draw down, 5% of
Baobab's equity was issued to the IDC during the period under review.
If the second tranche of $9.7 million (ZAR120 million) is not required by Baobab and therefore not advanced to Baobab,
the IDC may elect to exercise one of the following rights:
- Baobab shall issue new ordinary shares in Baobab equivalent to 5% of the entire issued share capital of Baobab to
the IDC for an aggregate subscription price of $4.9 million (ZAR60 million); or
- MC Mining shall issue ordinary shares in the Company equivalent to 1% of its entire issued share capital to the IDC
for an aggregate share price of $0.08 (ZAR1); or
- A penalty fee of $1 million (ZAR12 million) shall be paid to the IDC by Baobab
31 Dec 2017 30 Jun 2017
$'000 $'000
Opening balance 8,197 -
Loan advanced - 9,004
Debt issuance costs capitalised � cash based - (91)
Debt issuance costs � capitalised warrants - (1,096)
Interest accrued 1,268 212
Foreign exchange differences 564 168
10,029 8,197
18. ISSUED CAPITAL
During the reporting period, there were no shares issued, however the Company implemented a share consolidation of
20 to 1, resulting in a post consolidation number of shares of 140,879,585.
31 Dec 2017 30 June 2017
$'000 $'000
140,879,585 (2017: 2,817,587,529 pre-consolidated) fully paid ordinary shares 1,040,950 1,040,950
Movements in issued capital
Opening balance 1,040,950 1,006,435
Shares issued, net of costs - 34,515
1,040,950 1,040,950
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Options
The following unlisted options to subscribe for ordinary fully paid shares were included in the implementation of the
share consolidation. As a result, the options outstanding at 31 December 2017 are as follows:
Pre-consolidation
Number Issued Exercise Price Expiry Date
20,000,000* ZAR1.32 21 October 2018
5,000,000 GBP0.055 26 November 2018
Post-consolidation
Number Issued Exercise Price Expiry Date
1,000,000 ZAR26.40 21 October 2018
250,000 GBP1.10 26 November 2018
Performance Rights
The November 2015 and November 2016 performance rights were also subject to the share consolidation as follows:
Pre-consolidation
Number Issued Issue Date Expiry Date
20,544,116 27 November 2015 1 December 2018
21,657,462 30 November 2016 29 November 2019
ost-consolidation
Number Issued Issue Date Expiry Date
1,027,209 27 November 2015 1 December 2018
1,082,875 30 November 2016 29 November 2019
On 24 November 2017, 1,722,383 Performance Rights were issued to senior management. During the period,
13,433,659 pre-consolidation Performance Rights were forfeited from the 27 November 2015 and 30 November 2016 issues.
19. CONTINGENCIES AND COMMITTMENTS
The Group has contingent liabilities as listed below:
Makhado Water Commitment
MC Mining has agreed to acquire water allocation for the Makhado Project from water users situated near the proposed
colliery and the Company has undertaken to increase supply assurance without impacting negatively on the water
available for agriculture. The parties have in principle agreed to avoid endangering local agriculture by 'creating new
water', primarily by reducing losses, improving distribution and countering leakages and evaporation. The creation of
new water will be financed either through Mc Mining's funds, outside funding or a Public-Private-Partnership with one or
more organs of State or other appropriate entities.
The overall objective is the co-existence of mining and agriculture and includes a feasibility study and the completion of
projects identified in the study which will facilitate the creation of new water. In terms of the agreement, the Company
will be required to pay a total of $7.9 million. The first payments of $1.8 million are due 90 and 180 days after the granting
of the unencumbered IWUL, a further $0.6 million is payable eight months after the IWUL is granted and the balance
within five years of the granting.
Commitments
In addition to the commitments of the parent entity, subsidiary companies have financial commitments in terms of the
NOMR granted by the South African DMR. The commitments are based on the revenue generated by the colliery during
the financial year, and/or quantities of coal sold by the colliery during the financial year.
There are no other significant contingent liabilities as at 31 December 2017.
20. EVENTS SUBSEQUENT TO REPORTING DATE
No events subsequent to reporting date.
21. KEY MANAGEMENT PERSONNEL
Remuneration arrangements of key management personnel are disclosed in the annual financial report.
22. FINANCIAL INSTRUMENTS
This note provides information about how the Group determines fair values of various financial assets and financial liabilities.
Fair value of the Group's financial assets and financial liabilities that are measured at fair value on a recurring basis
Some of the Group's financial assets and financial liabilities are measured at fair value at the end of each reporting
period. The following table gives information about how the fair values of these financial assets and financial liabilities
are determined (in particular, the valuation technique(s) and inputs used).
31 Dec 30 Jun
2017 2017
1. Other financial Assets - Assets - Level 2 Value N/A N/A
assets � Unlisted $5.8m $7.5m certificate
Investments obtained from
investment
institution
The Directors declare that in the directors' opinion,
1. The condensed financial statements and notes of the consolidated entity are in accordance with the following:
a. complying with accounting standards and the Corporations Act 2001; and
b. giving a true and fair view of the consolidated entity's financial position as at 31 December 2017 and
of its performance for the half-year ended on that date.
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors, made pursuant to section 303(5)
of the Corporations Act 2001.
On behalf of the Directors
Bernard Robert Pryor David Hugh Brown
Chairman Chief Executive Officer
15 March 2018 15 March 2018
Dated at Johannesburg, South Africa, this 15th day of March 2018.
INDEPENDENT AUDITORS' REVIEW REPORT
Deloitte Touche Tohmatsu
The Board of Directors ABN 74 490 121 060
MC Mining Limited
Suite 8, 7 The Esplanade Tower 2, Brookfield Place
Mount Pleasant WA 6153 123 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
Tel: +61 8 9365 7000
Fax: +61 8 9365 7001
http://www.deloitte.com.au
15 March 2018
Dear Directors,
Auditor's Independence Declaration to MC Mining Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the
following declaration of independence to the directors of MC Mining Limited.
As lead audit partner for the review of the financial statements of MC Mining Limited for the
half year ended 31 December 2017, I declare that to the best of my knowledge and belief, there
have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the
review; and
(ii) any applicable code of professional conduct in relation to the review.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Independent Auditor's Review Report to the
members of MC Mining Limited (formerly Coal of Africa Limited)
We have reviewed the accompanying half-year financial report of MC Mining Limited, which
comprises the condensed consolidated statement of financial position as at 31 December 2017,
the condensed consolidated statement of profit or loss and other comprehensive income, the
condensed consolidated statement of cash flows and the condensed consolidated statement of
changes in equity for the half-year ended on that date, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors� declaration
of the consolidated entity comprising the company and the entities it controlled at the end of
the half-year or from time to time during the half-year.
Directors� Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation of the half-year financial report
that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the half-year financial report that gives a true and fair view and is
free from material misstatement, whether due to fraud or error.
Auditor�s Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our
review. We conducted our review in accordance with Auditing Standard on Review Engagements
ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity,
in order to state whether, on the basis of the procedures described, we have become aware of
any matter that makes us believe that the half-year financial report is not in accordance with
the Corporations Act 2001 including: giving a true and fair view of the consolidated entity�s
financial position as at 31 December 2017 and its performance for the half-year ended on that
date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Regulations 2001. As the auditor of MC Mining Limited, ASRE 2410 requires that
we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Auditor�s Independence Declaration
In conducting our review, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the
Corporations Act 2001, which has been given to the directors of MC Mining Limited, would be
in the same terms if given to the directors as at the time of this auditor�s review report.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that
makes us believe that the half-year financial report of MC Mining Limited is not in accordance
with the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity's financial position as at 31 December
2017 and of its performance for the half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the
Corporations Regulations 2001.
DELOITTE TOUCHE TOHMATSU
David Newman
Partner
Chartered Accountants
Perth, 15 March 2018
Date: 15/03/2018 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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