Wrap Text
Activities report for the quarter ended 30 September 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
ANNOUNCEMENT 29 October 2021
ACTIVITIES REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2021
FOR
MC MINING LIMITED (“MC Mining” or the “Company”) AND ITS SUBSIDIARY COMPANIES
HIGHLIGHTS
- Health and safety remains a priority and two lost-time injuries (LTI) were recorded during the quarter (FY2021
Q4: one LTI);
- Measures previously implemented to restrict the spread of the COVID-19 virus at the various group
workplaces remain in place. During the quarter, 14 employees (Q4 FY2021: two) contracted the virus;
- A COVID-19 vaccination programme was implemented at the high grade Uitkomst metallurgical and thermal
coal mine (Uitkomst Colliery or Uitkomst) during the Quarter resulting in over 71% of Uitkomst’s employees
now being vaccinated;
- Operations at the Uitkomst Colliery were suspended for four days in July due to civil unrest in the KwaZulu-
Natal province;
- Run-of-mine (ROM) coal production at Uitkomst was 12% lower than the September 2020 quarter (120,260
tonnes (t) vs. FY2021 Q1: 137,284t), mainly due to the shutdown caused by civil unrest;
- 70,545t of coal sales during the quarter (FY2021 Q1: 57,616t) comprising 67,673t (FY2021 Q1: 54,877t) of
high grade metallurgical and thermal coal and 5,872t (FY2021 Q1: 2,739t) of lower grade middlings coal;
- Revenue per tonne increased by 86% to $108/t (FY2021 Q1: $58/t) due to the much higher API4 coal prices
recorded during the quarter ($139/t vs. FY2021 Q1 $55/t);
- A prepayment facility of R29.7 million ($2.1 million) was agreed with Uitkomst’s largest customer for 16,500t
of coal, to be delivered at the rate of 2,750t per month over six months from September 2021 to February
2022;
- Limited activities were undertaken at the Company’s Makhado hard coking coal project (Makhado Project
or Makhado), Vele semi-soft coking and thermal coal colliery (Vele Colliery or Vele) and Greater
Soutpansberg Projects (GSP) during the quarter;
- The Industrial Development Corporation of South Africa Limited (IDC) agreed to extend the repayment date
for the R160 million ($11.3 million) loan plus accrued interest 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 Makhado, was also extended to 31 January 2022, subject to the IDC re-affirming its financial
due diligence;
- Makhado Project composite debt/equity funding initiatives, including detailed due diligence processes by
potential funders, continued during the quarter; and
- Available cash at quarter-end was $3.5 million ($3.2 million at 30 June 2021) and restricted cash was $0.03
million.
COMMENTARY
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 confirming its due diligence. If the Company does not repay the loan by 31 January
2022 and further extensions are not granted, the existing IDC facility may be converted into equity of MC Mining
or its subsidiary, Baobab Mining and Exploration (Pty) Ltd.
A number of parties are continuing their due diligence review for providing the balance of the funding required
by the Company to develop Makhado. MC Mining remains confident that the parties taking part in the process
will commit the necessary funds to complete the funding package, anticipated to be finalised during Q1 CY2022
with construction commencing in the following quarter. The Company is progressing several alternative
strategies to raise additional funding including, but not limited to, the issue of new equity for cash in MC Mining
or subsidiary companies, or further debt funding. Whilst the aforementioned funding discussions are expected
to be subject to successful negotiations, there can be no guarantee that any such discussions will be concluded,
or as to the timing or terms of such funding.
COVID-19
The health and safety of the MC Mining group’s employees and its contractors is a priority and measures
previously implemented to restrict the spread of COVID-19 remain in place. During the quarter, 14 Uitkomst
employees tested positive for the virus (FY2021 Q4: two positive tests). No positive COVID-19 cases were
reported at the Makhado, Vele and GSP projects.
Uitkomst Colliery – Utrecht Coalfields (70% owned)
Two LTIs recorded during the quarter (FY2021 Q4: one LTI).
The Uitkomst Colliery generated 120,260t of ROM coal during the quarter, 12% lower than the comparative Q1
FY2021. The decline is attributable to the four-day suspension of operating activities due to civil unrest and one
of the underground mining sections encountering three dykes during the quarter.
Sales of high grade duff and peas were 18% higher than the FY2021 comparative period (64,673t vs. 54,877t) as
prior year volumes were adversely affected by the delayed orders following the lifting of the COVID-19
lockdown. Uitkomst also sold 5,872t of high ash middlings coal during the quarter (FY2021 Q1: 2,739t). Volumes
were augmented by the disposal of coal stockpiles and Uitkomst had 3,164t of saleable coal on hand at the end
of the quarter compared to 8,753t carried at the beginning of the quarter.
The global economic recovery from the pandemic resulted in higher demand for coal and this was accompanied
by supply shortages and logistics constraints. As a result, the API4 export coal price continued to improve and
average prices for the three months were 153% higher ($139/t vs $55/t) and, as a consequence, Uitkomst’s
average revenue per tonne increased by 86% to $108/t (FY2021 Q1: $58/t). This price improvement was
somewhat offset by the strengthening of the South African rand against the US dollar (FY2022 Q1: R14.62 vs.
FY2021 Q1: R16.91 to US$1.00).
Production costs per saleable tonne increased 28% to $76/t (FY2020 Q4: $60/t) during the quarter due to the
lower volumes mined and the strengthening of the South African rand against the US dollar.
Quarter to end- Quarter to end-
Sept 2021 Sept 2020 %?
Production tonnages
Uitkomst ROM (t) 120,260 137,284 (12%)
Sales tonnages
High quality duff and peas (t) 64,673 54,877 18%
Middlings sales (t) 5,872 2,739 114%
70,545 57,616 22%
Quarter financial metrics
Revenue/t ($) 108 58 86%
Revenue/t (ZAR) 1,578 981 61%
Production cost/saleable tonnes ($)^ 76 60 28%
^ costs are all South African Rand based
To supplement working capital and to take advantage of higher prices, 16,500t of coal was presold realising
R29.7 million ($2.1 million), which is to be delivered at the rate of 2,750t per month from September 2021 to
February 2022.
Makhado Hard Coking Coal Project – Soutpansberg Coalfield (67% owned post BBBEE transaction)
The fully permitted Makhado Project recorded no LTIs (FY2021 Q4: nil) during the quarter.
MC Mining’s flagship Makhado Project has 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. During the
quarter the IDC extended the date for repayment of the existing 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
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.
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 Q4: 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 Q4: nil) during the quarter and no reportable activities occurred during the period.
Markets
The global economy continued to improve during the quarter, resulting in increased demand for coal. This led
to a rise in the price of quality South African export thermal coal, with API4 prices improving to $139/t compared
to $55/t recorded in Q1 FY2021 (FY2021 Q4: $105/t). Demand for hard coking coal also increased with average
prices of $250/t compared to $112/t in Q1 FY2021.
Appendix 5B – Quarterly Cash Flow Report
Available cash as at 30 September 2021 was $3.5 million. The aggregate amount of payments to related parties
and their associates as disclosed at item 6.1 of the September quarter Appendix 5B was $216k, comprising
executive director remuneration.
Attention is drawn to the disclosure in MC Mining’s annual results for the year ended 30 June 2021, published
by the Company on 30 September 2021, noting that there is a material uncertainty that may cast significant
doubt on the Group's ability to continue as a going concern and, therefore, that the entity may be unable to
realise its assets and discharge its liabilities in the normal course of business.
In order to meet its working capital requirements, the Group is exploring and progressing on several alternative
strategies to raise additional funding including, but not limited to:
- The issue of new equity for cash in the Company to current and new shareholders, of which the Group has
a demonstrated history of success in this regard;
- The issue of new equity for cash in subsidiary companies which own the Makhado project;
- Further debt funding;
- Further contractor BOOT funding arrangements; and
- The sale of a minority stake in the subsidiary companies holding the Makhado Project.
The Group also has the capacity if necessary to reduce its operating cost structure in order to minimise its
working capital requirements and defer the timing of any future capital raising. The conclusion of the debt and
equity raise is by its nature an involved process and is subject to successful negotiations with the external
funders and shareholders. Any equity raise is likely to be subject to a due diligence process. The Group has a
history of successful capital raisings to meet the Group's funding requirements.
Sam Randazzo
Chief Executive Officer
This announcement has been approved by the Company’s Disclosure Committee.
For more information contact:
Sam Randazzo CEO +61 408 945010
Tony Bevan Company Secretary Endeavour Corporate +61 08 9316 9100
Services
Company advisors:
James Harris / James Dance Nominated Adviser Strand Hanson Limited +44 20 7409 3494
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
during
Project Name Tenement Number Location Interest quarter
Chapudi Albert 686 MS Limpopo~ 74%
Project Bergwater 712 MS 74%
Remaining Extent and Portion 2 of Bergwater 74%
697 MS
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of Bluebell 480 74%
MS
Remaining Extent & Portion 1 of Bushy Rise 702 74%
MS
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 3 & 4 of Coniston 74%
699 MS
Driehoek 631 MS 74%
Remaining Extent of Dorps-rivier 696 MS 74%
Enfield 512 MS (consolidation of Remaining 74%
Extent of Enfield 474 MS, Brosdoorn 682 MS
& Remaining Extent of Grootvlei 684 MS)
Remaining Extent and Portion 1 of 74%
Grootboomen 476 MS 74%
Grootvlei 684 MS 74%
Kalkbult 709 MS 74%
Remaining Extent, Remaining Extent of Portion 74%
2, Remaining Extent of Portion 3, Portions 1,
4, 5, 6, 7 & 8 of Kliprivier 692 MS
Remaining Extent of Koodoobult 664 MS 74%
Koschade 657 MS (Was Mapani Kop 656 MS) 74%
Malapchani 659 MS 74%
Mapani Ridge 660 MS 74%
Melrose 469 MS 74%
Middelfontein 683 MS 74%
Mountain View 706 MS 74%
M'tamba Vlei 654 MS 74%
Remaining Extent & Portion 1 of Pienaar 635 74%
MS
Remaining Extent & Portion 1 of Prince's Hill 74%
704 MS
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Remaining Extent & Portion 1 of Ridge End 662 74%
MS
Remaining Extent & Portion 1 of Rochdale 700 74%
MS
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 MS 74%
Sandstone Edge 658 MS 74%
Change
during
Project Name Tenement Number Location Interest quarter
Remaining Extent of Portions 2 & 3 of 74%
Sterkstroom 689 MS
Sutherland 693 MS 74%
Remaining Extent & Portion 1 of Varkfontein 74%
671 MS
Remaining Extent, Portion 2, Remaining Extent 74%
of Portion 1 of Vastval 477 MS
Vleifontein 691 MS 74%
Ptn 3, 4, 5 & 6 of Waterpoort 695 MS 74%
Wildebeesthoek 661 MS 74%
Woodlands 701 MS 74%
Kanowna M27/41 Coolgardie^ Royalty<> (2.99%)
West M27/47 Royalty<> (2.99%)
M27/59 Royalty<> (2.99%)
M27/72,27/73 Royalty<> (2.99%)
M27/114 Royalty<> (2.99%)
M27/196 Royalty<> (2.99%)
M27/414,27/415 Royalty<> (2.99%)
P27/1826-1829 Royalty<> (2.99%)
P27/1830-1842 Royalty<> (2.99%)
P27/1887 Royalty<> (2.99%)
Kalbara M27/181 6.79% (0.45%)
Abbotshall ML63/409,410 Norseman^ Royalty
Royalty
Kookynie ML40/061 Leonora^ Royalty
Royalty ML40/135,136 Royalty
Makhado Fripp 645 MS Limpopo~ 69%#
Project Lukin 643 MS 69%#
Mutamba 668 MS 69%#
Salaita 188 MT 69%#
Tanga 849 MS 69%#
Daru 889 MS 69%#
Windhoek 900 MS 69%#
Generaal Beck 568 MS Limpopo~ 74%
Project Bekaf 650 MS 74%
Remaining Extent & Portion 1 of Boas 642 MS- 74%
Chase 576 MS 74%
Coen Britz 646 MS 74%
Fanie 578 MS 74%
Portions 1, 2 and Remaining Extent of Generaal 74%
587 MS
Joffre 584 MS 74%
Juliana 647 MS 74%
Kleinenberg 636 MS 74%
Remaining Extent of Maseri Pan 520 MS 74%
Remaining Extent and Portion 2 of Mount 100%
Stuart 153 MT
Change
during
Project Name Tenement Number Location Interest quarter
Nakab 184 MT 100%
Phantom 640 MS 74%
Riet 182 MT 100%
Rissik 637 MS 100%
Schuitdrift 179 MT 100%
Septimus 156 MT 100%
Solitude 111 MT 74%
Stayt 183 MT 100%
Remaining Extent & Portion 1 of Terblanche 100%
155 MT
Van Deventer 641 MS 74%
Wildgoose 577 MS 74%
Mopane Ancaster 501 MS Limpopo~ 100%
Project Banff 502 MS 74%
Bierman 599 MS 74%
Cavan 508 MS 100%
Cohen 591 MS 100%
Remaining Extent, Portions 1 & 2 of Delft 499 74%
MS
Dreyer 526 MS 74%
Remaining Extent of Du Toit 563 MS 74%
Faure 562 MS 74%
Remaining Extent and Portion 1 of Goosen 530 74%
MS
Hermanus 533 MS 74%
Jutland 536 MS 100%
Krige 495 MS 74%
Mons 557 MS 100%
Remaining Extent of Otto 560 MS (Now 74%
Honeymoon)
Remaining Extent & Portion 1 of Pretorius 531 74%
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, 9, Remaining Extent 74%
of Portion 10, Portions 13, 14, 15, 16, 17, 18,
19, 20, 21, 22, 23, 24, 26, 27, 29, 30, 35, 36,
37, 38, 39, 40, 41, 44, 45, 46, 48, 49, 50, 51,
52 & 54 of Vera 815 MS
Remaining Extent of Verdun 535 MS 74%
Voorburg 503 MS 100%
Scheveningen 500 MS 74%
Uitkomst Portion 3 (of 2) of Kweekspruit No. 22 KwaZulu- 70%
Colliery and Portion 8 (of 1) of Kweekspruit No. 22 Natal~ 70%
prospects Remainder of Portion 1 of Uitkomst No. 95 70%
Change
during
Project Name Tenement Number Location Interest quarter
Portion 5 (of 2) of Uitkomst No. 95 70%
Remainder Portion1 of Vaalbank No. 103 70%
Portion 4 (of 1) of Vaalbank No. 103 70%
Portion 5 (of 1) of Vaalbank No. 103 70%
Remainder of Portion 1 of Rustverwacht No. 70%
151
Remainder of Portion 2 of Rustverwacht No. 70%
151
Remainder of Portion 3 (of 1) of Rustverwacht 70%
No. 151
Portion 4 (of 1) Rustverwacht No.151 70%
Portion 5 (of 1) Rustverwacht No. 151 70%
Remainder of Portion 6 (of 1) of Rustverwacht 70%
No. 151
Portion 7 (of 1) of Rustverwacht No. 151 70%
Portion 8 (of 2) of Rustverwacht No. 151 70%
Remainder of Portion 9 (of 2) of Rustverwacht 70%
No. 151
Portion 11 (of 6) of Rustverwacht No. 151 70%
Portion 12 (of 9) of Rustverwacht No. 151 70%
Portion 13 (of 2) of Rustverwacht No. 151 70%
Portion 14 (of 2) of Rustverwacht No. 151 70%
Portion 15 (of 3) of Rustverwacht No. 151 70%
Portion 16 (of 3) of Rustverwacht No. 151 70%
Portion 17 (of 2) of Rustverwacht No. 151 70%
Portion 18 (of 3) of Waterval No. 157 70%
Remainder of Portion 1 of Klipspruit No. 178 70%
Remainder of Portion 4 of Klipspruit No. 178 70%
Remainder of Portion 5 of Klipspruit No. 178 70%
Portion 6 of Klipspruit No. 178 70%
Portion 7 (of 1) of Klipspruit No. 178 70%
Portion 8 (of 1 )of Klipspruit No. 178 70%
Portion 9 of Klipspruit No. 178 70%
Remainder of Portion 10 (of 5) of Klipspruit No. 70%
178
Portion 11 (of 5) of Klipspruit No. 178 70%
Portion 13 (of 4) of Klipspruit No. 178 70%
Remainder of Portion 14 of Klipspruit No. 178 70%
Portion 16 (of 14) of Klipspruit No. 178 70%
Portion 18 of Klipspruit No. 178 70%
Portion 23 of Klipspruit No. 178 70%
Remainder of Portion 1 of Jackalsdraai No. 299 70%
Remainder of Jericho B No. 400 70%
Portion 1 of Jericho B No. 400 70%
Portion 2 of Jericho B No. 400 70%
Portion 3 of Jericho B No. 400 70%
Remainder of Jericho C No. 413 70%
Change
during
Project Name Tenement Number Location Interest quarter
Portion 1 of Jericho C No. 413 70%
Remainder of Portion 1 of Jericho A No. 414 70%
Remainder of Portion 2 (of 1) of Jericho A No. 70%
414
Portion 3 (of 1) of Jericho A No. 414 70%
Portion 4 (of 1) of Jericho A No. 414 70%
Portion 5 (of 2) of Jericho A No. 414 70%
Portion 6 (of 1) of Jericho A No. 414 70%
Margin No. 420 70%
Vele Colliery Portions of Overvlakte 125 MS (Remaining Limpopo~ 100%
and Extent, 3, 4, 5, 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 Unsurveyed State Land Limpopo~ 60%
known as Mutale
* Form part of the Greater Soutpansberg Projects
~ Tenement located in the Republic of South Africa
^ Tenement located in Australia
MC Mining’s interest will reduce to 67% on completion of the 26% Broad Based Black Economic Empowerment (BBBEE)
transaction
<> net smelter royalty of 0.5%
Date: 29-10-2021 11:02:00
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