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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 15 July 2019
DEBT FUNDING SECURED FOR PHASE 1 OF THE MAKHADO HARD COKING COAL PROJECT
MC Mining Limited ('MC Mining') is pleased to announce the approval by the Industrial Development
Corporation of South Africa Limited ('IDC') Credit Committee of a term loan facility (the 'Term Loan'
or 'Loan') to fund the construction of Phase 1 of the Makhado hard coking coal project ('Makhado
Project' or 'Makhado').
The Term Loan reaffirms the economics of the Makhado Project and follows the conclusion of off-take
agreements for the coal to be produced by Phase 1. Proceeds of the Loan will be utilised to develop
the west pit and modify the existing Vele Colliery processing plant, with construction expected to take
nine months followed by first coal production in month ten.
The Makhado Project is 69% owned by MC Mining's subsidiary Baobab Mining & Exploration (Pty) Ltd
('Baobab') with the IDC having a 5% interest and, in compliance with South African black economic
empowerment ('BEE') requirements, seven local communities own 20% and 6% is held by a black
industrialist.
The salient features of the Term Loan are, subject to documentation:
' the IDC will advance R245 million ($17.5 million1) to MC Mining;
' draw-down can take place any time before 30 June 2021 and the Loan will endure for a period of
seven years following draw-down;
' coupon of the South African Prime interest rate (currently 10.25%) plus a margin that reflects the
significant progress made on Makhado as well as the increased confidence that the IDC has in the
execution of the project; and
' capital repayments will only commence 24 months after the first draw-down and will be repaid in
20 equal quarterly instalments.
The Loan is subject to various conditions precedent including:
' MC Mining issuing additional equity to shareholders for a minimum of R200 million ($14.3 million);
and
' settlement of the existing 2017 loan facility between the IDC, MC Mining and Baobab, which at 30
June 2019 amounted to R184.7 million ($13.2 million), and termination of all agreements in this
regard.
The security for the Term Loan includes:
' MC Mining, Baobab and Limpopo Coal Company (Pty) Ltd ('Limpopo'), the owner of the Vele
Colliery, standing as sureties; and
' Baobab and Limpopo's assets pledged as security for the Loan.
The securing of the Term Loan is a key component for the development of Phase 1 of the Makhado
Project. The total funding requirement for both Phase 1 and the settlement of the existing 2017 loan
facility is some R700 million ($50 million). The Term Loan will satisfy R245 million ($17.5 million) of
this, leaving a residual equity requirement of R455 million ($32.5 million). MC Mining anticipates that
an equity raise to secure the residual equity requirement will be completed in due course enabling
construction activities to commence later in Q3 CY2019.
1 All dollar amounts are based on an exchange rate of R14.00:US$1.00
Phase 1 is a critical step in the development of Phase 2 of the Makhado Project, which also has
significant positive economics. The construction of Phase 2 which is anticipated to commence from
CY2022 will yield approximately 0.8 million tonnes per annum ('Mtpa') of hard coking coal and
between 0.9Mtpa and 1.0Mtpa of export quality thermal coal. MC Mining has already secured off-
take agreements for circa 50% of the hard coking coal.
David Brown, CEO commented:
'The approval of the IDC funding is a positive step for the development of MC Mining's flagship
Makhado Project. The company is positioned to become South Africa's pre-eminent producer of high-
grade metallurgical coal with long-term hard coking coal markets supported by growing global steel
demand, driven by economic development and urbanisation.
The Loan reflects the IDC's support for the development of the Makhado Project and replaces the
2017 financing that was utilised to fund pre-project activities, including securing the numerous
regulatory licences and approvals. Phase 1 utilises the existing Vele Colliery processing facility as well
as previously tested logistics infrastructure and with an internal rate of return in excess of 45% and a
payback of less than 2.5 years, generates significant returns for shareholders. MC Mining will now
progress the remainder of the Phase 1 funding requirements and anticipates that this will be
completed in Q3 CY2019 with construction commencing later in the same period, followed by a short
construction period of nine months.'
Authorised by
David Brown
Chief Executive Officer
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
For more information contact:
David Brown Chief Executive Officer MC Mining Limited +27 10 003 8000
Brenda Berlin Chief Financial Officer MC Mining Limited +27 10 003 8000
Tony Bevan Company Secretary Endeavour Corporate Services +61 08 9316 9100
Company advisors:
Jos Simson/Emily Fenton Financial PR (United Kingdom) Tavistock +44 20 7920 3150
Ross Allister/ David McKeown Nominated Adviser and Broker Peel Hunt LLP +44 20 7418 8900
Charmane Russell/Olwen Auret Financial PR (South Africa) Russell & Associates +27 11 880 3924 or
+27 82 372 5816
Investec Bank Limited is the nominated JSE Sponsor
About MC Mining Limited:
MC Mining Limited (MC Mining) is an AIM/ASX/JSE listed coal exploration, development and mining company operating in
South Africa. MC Mining's key projects include the Uitkomst Colliery (metallurgical coal), Makhado coking and thermal coal
project, Vele Colliery (coking and thermal coal) and the Greater Soutpansberg Projects (coking and thermal coal).
Forward-Looking Statements
This Announcement, including information included or incorporated by reference in this Announcement, may contain
"forward-looking statements" concerning MC Mining that are subject to risks and uncertainties. Generally, the words "will",
"may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking
statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ
materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors
that are beyond MC Mining's ability to control or estimate precisely, such as future market conditions, changes in regulatory
environment and the behaviour of other market participants. MC Mining cannot give any assurance that such forward-
looking statements will prove to have been correct. The reader is cautioned not to place undue reliance on these forward
looking statements. MC Mining assumes no obligation and do 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.
Date: 15/07/2019 08:00:00
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