Wrap Text
Activities report for the quarter ended 31 March 2021
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 22 April 2021
ACTIVITIES REPORT FOR THE QUARTER ENDED 31 MARCH 2021 FOR
MC MINING LIMITED (“MC MINING” OR THE “COMPANY”) AND ITS SOUTH AFRICAN BASED SUBSIDIARY
COMPANIES
HIGHLIGHTS
- Health and safety remains a priority at the high-grade Uitkomst metallurgical and thermal coal mine
(“Uitkomst Colliery” or “Uitkomst”), with one lost-time injury (“LTI”) recorded during the quarter (FY2021
Q2: one LTI);
- Nine employees contracted the Covid-19 virus during the quarter, however, measures implemented to
restrict the spread of the virus within the MC Mining group workplace are proving successful, with no new
cases reported since the quarter-end;
- Run-of-mine (“ROM”) coal production at Uitkomst was 9% lower than the comparative March 2020 quarter
(FY2021 Q3: 115,944 tonnes (“t”) vs. FY2020 Q3: 127,122t) primarily due to:
i) a three-day union led blockade at the Uitkomst Colliery in February 2021;
ii) displays of cold and flu symptoms resulting in higher than usual employee absenteeism;
iii) having to work through a non-productive dyke incursion.
- Uitkomst’s coal sales declined 15% to 62,301t (FY 2020 Q3: 72,942t) due to its main customer’s six-week
repair and maintenance shutdown of its steel making plant;
- The API4 coal price averaged $91/t during the quarter, 15% above the comparative Q3 FY2020 period
($79/t) and the price is forecast to remain high as the post pandemic world economic recovery fuels greater
demand for coal;
- Revenue per tonne increased by 4% to $71.76/t (FY2020 Q3: $69.33/t), as the higher API4 price recorded
during the quarter was offset by a change in sales mix, with sales of high value coal being proportionately
lower compared to Q3 FY2020;
- Production volumes returned to normal by the end of the quarter and sales volumes are expected to
normalise during the June quarter;
- 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;
- Industrial Development Corporation of South Africa Limited (“IDC”) extended the repayment date for the
R160 million ($11.1 million) outstanding loan plus accrued interest, to 31 July 2021;
- The terminal draw down date of the additional R245 million ($17.0 million) IDC term loan for the
development of Phase 1 of the Makhado Project, was extended to 31 July 2021, subject to the IDC re-
affirming its financial due diligence;
- Composite debt/equity funding initiatives for the Makhado Project continued during the quarter;
- The South African Department of Mineral Resources & Energy (“DMRE”) granted the mining right for the
74%-owned Mopane coking and thermal coal project (“Mopane Project”), one of the three projects forming
part of the GSP;
- Non-executive director, Mr Sam Randazzo was appointed as interim Chief Executive Officer (“CEO”) while
the executive search for a permanent CEO continues;
- Appointment of Tennyson Securities as MC Mining’s sole broker under the AIM Rules; and
- Available cash at quarter-end was $2.3 million ($2.0 million at the end of December 2020) and restricted
cash was $0.03 million.
QUARTERLY COMMENTARY
During the quarter, the IDC formally extended the repayment date of the R160 million ($11.1 million) loan to 31
July 2021. The IDC also extended the terminal draw down date for the conditional R245 million ($17.0 million)
Makhado Project development term loan facility, to 31 July 2021.
As previously announced, MC Mining has secured a significant portion of the Makhado project funding package
and continues to be in discussions with a number of parties to complete the balance of the funding package.
Covid-19
The health and safety of the MC Mining group’s employees and its contractors remains the prevailing priority
and measures previously implemented to prevent the spread of Covid-19 remain in place. During the quarter,
an Uitkomst employee unfortunately passed away due to Covid-19 and nine Uitkomst employees tested positive
for the virus (FY2021 Q2: one positive test). No positive Covid-19 cases were reported at the Makhado, Vele and
GSP projects.
Covid-19 preventative measures implemented to restrict the spread of the virus within the MC Mining group
workplace are proving successful with no new cases reported since the quarter-end.
Uitkomst Colliery – Utrecht Coalfields (70% owned)
One LTI was recorded during the quarter (FY2021 Q2: one LTI).
Uitkomst had commenced with a Section 189 (of the Labour Relations Act) restructuring process that was
intended to result in 42 positions at the colliery being made redundant. Following a three-day union led
blockade, Uitkomst agreed to the suspension of the Section 189 process until June 2021. That blockade
prevented mining for three days, resulting in the loss of approximately 8,000t of ROM coal production.
Mining activities during the quarter were also affected by higher levels of absenteeism due to suspected Covid-
19 cases, as well as by sub-optimal geological conditions being encountered during mining activities, including a
dyke and an area with low seam heights. Uitkomst Colliery produced 115,944t of ROM coal for the three months,
9% lower than the comparative March 2020 period (FY2020 Q3: 127,122t).
Uitkomst Colliery’s largest customer experienced equipment breakdowns in early February which resulted in a
six week shutdown of its steel making plant. This significantly reduced its purchases of Uitkomst’s high value
coal in both February and March and combined with the 9% decline in ROM coal production, this resulted in
sales of Uitkomst higher-value coal being 17% lower than in the comparative period (53,512t vs. 64,264t). The
colliery also sold 8,789t of high ash middlings coal during the quarter (FY2020 Q3: 8,678t). These lower sales
volumes led to elevated inventory levels and Uitkomst had 20,494t of saleable coal on hand at the end of the
March quarter (FY2020 Q3: 12,316t; FY2021 Q2: 15,092t). Production at Uitkomst’s largest customer has
subsequently normalised and the surplus inventory is expected to be sold during Q4 FY2021.
Average API4 coal prices were 15% higher in the quarter than in the comparative period in FY2020 ($91/t vs
$79/t). The higher API4 price recorded during the quarter was offset by a change in sales mix, with sales of high
value coal being proportionately lower compared to Q3 FY2020. Accordingly, despite higher API4 prices, revenue
per tonne only increased by 4% to $71.76/t (FY2020 Q3: $69.33/t). A significant proportion of Uitkomst’s costs
are fixed costs and the 15% decline in sales volumes resulted in production costs per saleable tonne increasing
14% to $72.74/t (FY2020 Q3: $63.97/t).
Quarter to end- Quarter to end-
Mar 2021 Mar 2020 %
Production tonnages
Uitkomst ROM (t) 115 944 127 122 (9%)
Sales tonnages
Metallurgical and thermal coal (t) 53 512 64 264 (17%)
Middlings sales 8 789 8 678 1%
62 301 72 942 (15%)
Quarter financial metrics
Revenue/t ($) 71.76 69.33 4%
Revenue/t (ZAR) 1 073 1 064 1%
Production cost/saleable tonnes ($)^ 72.74 63.97 14%
^ 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 Q2: 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 support for the development of the Makhado Project. MC Mining previously
utilised R160 million ($11.1 million) of the IDC facility 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 R160 million loan plus interest, to 31 July 2021. The
IDC also agreed to extend the terminal draw down date in respect of the conditional R245 million ($17.0 million)
term loan facility for the development of the Makhado Project, to 31 July 2021, subject to the IDC reaffirming
its financial due diligence.
The Company and IDC continue discussions with the objective of aligning repayment of the R160 million loan
(plus interest) with the positive cash flows generated by Makhado. MC Mining is confident that a satisfactory
position can be reached with the IDC. In the unlikely event that the parties cannot reach agreement on further
deferment terms and the Company does not repay the loan by the repayment date, the financing
documentation allows for the debt to be converted into equity.
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 Q2: 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 Q2: nil) during the quarter.
GSP comprises the Chapudi, Mopane and Generaal areas that are MC Mining’s longer-term coking and thermal
coal projects and the DMRE granted the mining right for the Mopane Project during the quarter. The Mopane
Project contains 230 million gross tonnes in situ of measured and indicated coal resources (1) and supports MC
Mining’s strategy of being South Africa’s pre-eminent producer of HCC.
Markets
The global economy is showing signs of improvement following the spread of Covid-19 in H1 CY2020. This is
reflected in the demand for South African thermal coal with average API4 coal prices during the quarter
improving to $91/t, 15% higher than the $79/t recorded in Q3 FY2020 (FY2021 Q2: $73/t). HCC remained under
Footnote:
(1) The GSP independent Competent Persons Report can be found on the Company’s website: http://www.mcmining.co.za/our-
business/projects/gsp-mbeu-yashu
pressure due to geopolitical events and average prices were 16% lower than the comparative period ($126/t vs.
$149/t).
Appendix 5B – Quarterly Cash Flow Report
The cash position of the MC Mining group as at 31 March 2021 was $2.3 million.
The aggregate amount of payments to related parties and their associates as disclosed at item 6.1 of the March
quarter Appendix 5B was $81k, comprising a retiring executive director salary, group life cover and accrued leave
entitlements on termination.
Sam Randazzo
Interim 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 Services +61 08 9316 9100
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 Africa) R&A Strategic Communications +27 11 880 3924
Investec Bank Limited is the nominated JSE Sponsor
About MC Mining Limited:
MC Mining is an AIM/ASX/JSE-listed coal exploration, development and mining company operating in South Africa. MC Mining’s key projects
include the Uitkomst Colliery (metallurgical 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 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 74%
702 MS
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 3 & 4 of 74%
Coniston 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 74%
Portion 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 74%
662 MS
Remaining Extent & Portion 1 of Rochdale 74%
700 MS
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 MS 74%
Sandstone Edge 658 MS 74%
Change
Project during
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 74%
Extent 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^ 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 of Boas 642 74%
MS-
Chase 576 MS 74%
Coen Britz 646 MS 74%
Fanie 578 MS 74%
Portions 1, 2 and Remaining Extent of 74%
Generaal 587 MS
Joffre 584 MS 74%
Juliana 647 MS 74%
Kleinenberg 636 MS 74%
Remaining Extent of Maseri Pan 520 MS 74%
Change
Project during
Name Tenement Number Location Interest quarter
Remaining Extent and Portion 2 of Mount 100%
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 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 74%
530 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 74%
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, 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%
Portion 3 (of 2) of Kweekspruit No. 22 70%
Change
Project during
Name Tenement Number Location Interest quarter
Uitkomst Portion 8 (of 1) of Kweekspruit No. 22 KwaZulu- 70%
Colliery and Natal~
prospects Remainder of Portion 1 of Uitkomst No. 95 70%
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 70%
Rustverwacht 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 70%
Rustverwacht 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 70%
Rustverwacht 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 70%
No. 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. 70%
299
Remainder of Jericho B No. 400 70%
Change
Project during
Name Tenement Number Location Interest quarter
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%
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
Date: 22-04-2021 08:00:00
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