Wrap Text
Activities report for the quarter ended 30 June 2021 for MC Mining Limited and its subsidiary companies
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
ACTIVITIES REPORT FOR THE QUARTER ENDED 30 JUNE 2021 FOR MC MINING LIMITED (“MC Mining” or the “Company”) AND ITS SUBSIDIARY COMPANIES
HIGHLIGHTS
• Health and safety remain a priority at MC Mining and its subsidiary
companies, with one lost-time injury (“LTI”) recorded during the quarter
(FY2021 Q3: one LTI);
• Measures implemented to restrict the spread of the COVID-19 virus within
the MC Mining group workplace are proving successful with only two
employees (Q3 FY2021: nine) contracting the virus during the quarter;
• The Industrial Development Corporation of South Africa Limited (“IDC”),
on 30 July 2021, confirmed the repayment date for the R160 million ($11.3
million) loan plus accrued interest has been extended to 31 January 2022;
• The terminal drawdown date of the additional R245 million ($17.3 million)
IDC term loan for the development of Phase 1 of the Makhado hard coking
coal project (“Makhado Project” or “Makhado”), was also extended to 31
January 2022, subject to the IDC re-affirming its financial due diligence;
• Run-of-mine (“ROM”) coal production at the high grade Uitkomst
metallurgical and thermal coal mine (“Uitkomst Colliery” or “Uitkomst”)
was 208% higher than the June 2020 quarter (FY2021 Q4: 127,927 tonnes
(“t”) vs. FY2020 Q4: 41,536t) due to the South African Government-imposed
COVID-19 lockdown for a large part of the comparative period.
• 90,858t of coal sales during the quarter (FY 2020 Q4: 19,429t) comprising
84,834t (FY 2020 Q4: 16,707t) of high grade metallurgical and thermal
coal and 6,024t (FY 2020 Q4: 2,722t) of lower grade middlings coal;
• The API4 coal price averaged $105/t during the quarter compared to $55/t
in Q3 FY2020 and the price is forecast to remain high for the balance of
CY2021 as the post-pandemic world economic recovery fuels greater demand
for coal;
• Revenue per tonne increased by 47% to $84.91/t (FY2020 Q4: $57.88/t) due
to the much higher API4 coal prices recorded during the quarter ($105/t
vs. $55/t);
• Limited activities were undertaken at the Company’s Makhado Project, Vele
semi-soft coking and thermal coal colliery (“Vele Colliery” or “Vele”)
and Greater Soutpansberg Projects (“GSP”) during the quarter;
• Makhado Project composite debt/equity funding initiatives, including
detailed due diligence processes, continued during the quarter; and
• Available cash at quarter-end was $3.2 million ($2.3 million at the end
of March 2021) and restricted cash was $0.03 million.
COMMENTARY
A number of parties are in advanced stages of their due diligence for the
balance of the funding required to develop the Makhado Project. The Company
remains confident that the parties taking part in the process will commit
the necessary funds to complete the funding package.
The IDC reaffirmed their support for the Makhado Project by formally
extending the repayment date of the existing R160 million ($11.3 million)
loan to 31 January 2022. The IDC also agreed to extend the terminal draw
down date for the conditional R245 million ($17.3 million) Makhado Project
development term loan facility, to 31 January 2022, subject to the bank
confirming its due diligence.
COVID-19
The health and safety of the MC Mining group’s employees and its contractors
is a priority and measures previously implemented to prevent the spread of
COVID-19 remain in place. During the quarter, two Uitkomst employees tested
positive for the virus (FY2021 Q3: nine positive tests). No positive COVID-
19 cases were reported at the Makhado, Vele and GSP projects.
Uitkomst Colliery – Utrecht Coalfields (70% owned)
One LTI was recorded during the quarter (FY2021 Q3: one LTI).
The Uitkomst Colliery generated 127,927t of ROM coal during the quarter,
208% higher than in the comparative Q4 FY2020 period. Production during Q4
FY2020 was limited due to the South African Government-imposed lockdown,
introduced to reduce the spread of COVID-19, that resulted in the temporary
suspension of activities at the colliery and its customers.
Coal sales to Uitkomst’s largest customer returned to normal levels during
the quarter, following that customer experiencing equipment breakdowns during
Q3 FY2021 and compared to lower sales levels during the comparative COVID-
19 lockdown period in Q4 FY2020.
Sales of higher-value coal were therefore significantly above the Q4 2020
comparative period (84,834t vs. 16,707t). The Uitkomst Colliery also sold
6,024t of high ash middlings coal during the quarter (FY2020 Q4: 2,722t).
The sales volumes during the quarter were augmented by the sale of coal
stockpiles carried over from the preceding period and Uitkomst had 8,753t of
saleable coal on hand at the end of the quarter (FY2021 Q3: 20,494t).
Increased global demand has led to the API4 export coal price recovery from
the low prices experienced during the COVID-19 induced economic downturn in
CY2020. Average US-dollar denominated API4 prices was 91% higher in the
quarter ($105/t vs $55/t) and, as a consequence, Uitkomst’s average revenue
per tonne increased by 47% to $84.91/t (FY2020 Q4: $57.88/t) with this
improvement somewhat offset by the strengthening of the rand against the
dollar (FY2021 Q4: R14.14 vs. FY2020 Q4: R17.97 to US$1.00).
Production costs per saleable tonne decreased 45% to $56.74/t (FY2020 Q4:
$103.10/t). The significantly higher FY2020 Q4 comparative production costs
were due to lower tonnes mined during the COVID-19 lockdown enforced mine
closure.
Quarter to Quarter to
end-Jun 2021 end-Jun 2020 %?
Production tonnages
Uitkomst ROM (t) 127,927 41,536 208%
Sales tonnages
Metallurgical and thermal
84,834 16,707 408%
coal (t)
Middlings sales 6,024 2,722 121%
90,858 19,429 368%
Quarter financial metrics
Revenue/t ($) 84.91 57.88 47%
Revenue/t (ZAR) 1,201 1,040 15%
Production cost/saleable
56.74 103.10 (45%)
tonnes ($)^
^ costs are all South African Rand based
Makhado Hard Coking Coal Project – Soutpansberg Coalfield (67% owned)
The fully permitted Makhado Project recorded no LTIs (FY2021 Q3: nil) during
the quarter.
MC Mining’s flagship Makhado Project has very favourable economics and its
phased development is expected to deliver positive returns for shareholders.
Makhado has a life-of-mine in excess of 46 years and the project would
position MC Mining as South Africa’s pre-eminent hard coking coal (“HCC”)
producer.
The IDC has provided longstanding financial support for the development of
the Makhado Project and MC Mining has utilised an IDC loan of R160 million
($11.3 million) to progress Makhado to its fully-permitted status and to
partially fund the acquisition of the surface rights over the project area.
The IDC is also a 6.7% shareholder in MC Mining subsidiary, Baobab Mining &
Exploration (Pty) Ltd, the owner of the Makhado Project. The Company
regularly interacts with the IDC as well as potential funders and, subsequent
to the end of the quarter, the IDC extended the date for repayment of the
R160 million loan plus interest, to 31 January 2022. The IDC also agreed to
extend the terminal draw down date in respect of the conditional R245 million
($17.3 million) term loan facility for the development of the Makhado
Project, to 31 January 2022, subject to the bank confirming its financial
due diligence. The Company and IDC are also continuing discussions with the
objective of aligning repayment of the IDC facilities with the positive cash
flows generated by Makhado.
DRA Projects (SA) (Pty) Ltd (“DRA”) completed the initial Makhado Phase 1
capital estimate in October 2019. Given the lapse in time and the known rise
in steel prices, the Company contracted DRA to review the Makhado Phase 1
development cost estimate during the quarter. This review was completed and
resulted in a revised development cost estimate for Makhado Phase 1 of R650.5
million ($46 million).
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 (FY2021 Q3: 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 (FY2021 Q3: nil) during the quarter and no reportable
activities occurred during the period.
Markets
The global economy continued to improve during the quarter, driving global
demand for commodities following the spread of COVID-19 during H1 CY2020.
This is reflected in the increased demand for South African thermal coal,
with average API4 coal prices improving to $105/t, 91% higher than the $55/t
recorded in Q4 FY2020 (FY2021 Q3: $91/t). Demand for HCC also increased
during the quarter and average prices were 19% higher than in the comparative
period ($134/t vs. $112/t).
Appendix 5B – Quarterly Cash Flow Report
The cash position of the MC Mining group as at 30 June 2021 was $3.2 million.
The aggregate amount of payments to related parties and their associates as
disclosed at item 6.1 of the June quarter Appendix 5B was $34k, comprising
executive director remuneration.
Sam Randazzo
Chief Executive Officer
This announcement has been approved by the Company’s Disclosure Committee.
This announcement contains inside information for the purposes of Article 7 of
Regulation 596/2014.
For more information contact:
Tony Bevan Company Secretary Endeavour Corporate +61 08 9316 9100
Services
Company advisors:
James Harris / James Nominated Adviser Strand Hanson Limited +44 20 7409 3494
Dance
Rory Scott Broker (AIM) Tennyson Securities +44 20 7186 9031
James Duncan Financial PR (South R&A Strategic +27 11 880 3924
Africa) Communications
Investec Bank Limited is the nominated JSE Sponsor
About MC Mining Limited:
MC Mining is an AIM/ASX/JSE-listed coal exploration, development and mining company operating
in South Africa. MC Mining’s key projects include the Uitkomst Colliery (metallurgical 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~ 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 889 MS 69%#
Windhoek 900 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
~ 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
30 July 2021
JSE Sponsor
Investec Bank Limited
Date: 30-07-2021 09:12:00
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