TIDMMCM
RNS Number : 0520B
MC Mining Limited
28 January 2020
ANNOUNCEMENT
28 January 2020
REPORT FOR THE QUARTERED 31 DECEMBER 2019
UITKOMST COLLIERY GENERATES PLEASING RESULTS
MC Mining Limited ("MC Mining" or the "Company") which operates
in South Africa, together with its subsidiaries, hereby provides
its update for the three months ended 31 December 2019, the second
quarter (the "Quarter") of the Company's 2020 financial year. 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.
Salient operational features
-- Safety initiatives continued at the high-grade Uitkomst
metallurgical and thermal coal mine ("Uitkomst Colliery" or
"Uitkomst") with two lost-time injuries ("LTIs") recorded during
the Quarter (FY2020 Q1: five LTIs);
-- Optimisation initiatives and changes in mine management
implemented during H2 CY2019 resulted in Uitkomst's run-of-mine
("ROM") coal production for the Quarter increasing 13% compared to
the December 2018 period (127,021 tonnes ("t") vs. 112,562t);
-- Sales of high-grade metallurgical, thermal and high-ash
middlings coal was 24% higher than the comparative period (84,578t
vs. 68,359t);
-- 8,817t of high-ash middlings coal sold during the Quarter (FY2019 Q2: 0t);
-- Continuation of composite debt/equity funding initiatives for
the Makhado hard coking coal project ("Makhado Project" or
"Makhado");
-- Vele semi-soft coking and thermal coal colliery ("Vele
Colliery") remained on care and maintenance during the Quarter, but
the Vele processing plant is expected to be refurbished and
recommissioned as part of Phase 1 of the Makhado Project; and
-- The South African Department of Mineral Resources ("DMR")
granted a mining right for the 74% owned Generaal coking and
thermal coal project ("Generaal Project"), one of the three
projects comprising the Company's Greater Soutpansberg Project
("GSP").
Coal market and financial features
-- API4 export thermal coal prices increased from $59/t in
September 2019 to $83/t in December 2019 with average prices for
the Quarter of $76/t (FY2019 Q2: 96/t);
-- Premium hard coking coal ("HCC") prices declined
significantly in the second half of CY2019 with average prices
during the Quarter of $139/t (down from $223/t Q2 FY2019); and
-- Available cash at Quarter-end of $3.5 million ($5.3 million
at the end of September 2019) with restricted cash of $0.03
million.
David Brown, CEO commented:
"Uitkomst generated extremely pleasing results for the Quarter
with the change of mine management and optimisation initiatives
implemented at the colliery earlier in H2 CY2019 yielding positive
results and ROM coal production improved 13% on the comparative
three-months. This follows the 8% improvement in ROM coal
production recorded in the September 2019 quarter. The Quarter also
witnessed increases in API4 export coal prices accompanied by
improved domestic demand for Uitkomst's metallurgical and thermal
coal. This resulted in sales for the three months increasing 24%
compared to Q2 FY2019, improving operating cash flows and
profitability. The colliery continues to assess potential coal
marketing opportunities.
The Company had a very successful CY2019 with the completion of
key milestones required for the development of our flagship, fully
permitted Makhado Project. This included the acquisition of the
remaining properties and securing of Phase 1 hard coking and
thermal coal off-take agreements. Phase 1 utilises the existing
Vele Colliery processing facility as well as previously tested
logistics infrastructure and has an internal rate of return in
excess of 45% and a payback of less than 2.5 years. The progress
facilitated the commencement of the Phase 1 composite debt/equity
funding initiatives and resulted in the Company securing a $17
million term-loan from the IDC, which will contribute to the $52
million required to develop Phase 1 and reflects their support for
the Makhado Project. MC Mining is progressing the remaining Phase 1
funding requirements and anticipates that these will be completed
in H1 CY2020 with construction commencing in H2 CY2020."
QUARTERLY COMMENTARY
Uitkomst Colliery - Utrecht Coalfields (70% owned)
The completion of a re-training programme and continued key
focus on safety contributed to the improved performance at Uitkomst
and the colliery recorded two LTIs during the Quarter (FY2020 Q1:
five LTIs).
The optimisation initiatives and management changes implemented
during H2 CY2019 continued to yield improvements and ROM coal
production was 13% higher than the comparable period (127,021t vs
112,562t). The ROM coal generated high-grade metallurgical and
thermal coal sales of 75,761t compared to 67,606t in Q2 FY2019 and
included the sale of carry-over inventory from the previous quarter
of 6,815t (FY2019 Q2: 4,414t). Uitkomst sold 8,817t (FY2019 Q2: 0t)
of high-ash middlings coal during the Quarter (FY2019 Q2: nil
t).
Uitkomst's revenue benefitted from improved production levels as
well as higher API4 coal prices compared to the preceding three
months. However, the average API4 international thermal coal prices
were 21% lower than the comparative period in 2019 ($76/t vs
$96/t). Production costs per ROM tonne declined from $49/t to
$36/t, benefitting from the 13% increase in ROM coal production, a
3% weakening of the ZAR:US$ exchange rate as well as a reduction in
mining costs following the implementation of cost control
measures.
Quarter to Quarter to
end-Dec 2019 end-Dec 2018 %
Production tonnages
Uitkomst ROM (t) 127 021 112 562 13%
Sales tonnages
Own ROM (t) 75 761 67 606 12%
Middlings sales 8 817 - 100%
Purchased ROM to blend
(t) - 753 (100%)
84 578 68 359 24%
Quarter financial metrics
Revenue/t ($) 70.25 91.25 (23%)
Revenue/t (ZAR) 1 033 1 306 (21%)
Production cost/ROM tonnes
($)^ 36.08 48.92 (26%)
---------------------------- -------------- -------------- -------
^ costs are all South African Rand based
The Uitkomst Colliery has an estimated 15-years life-of-mine
("LOM") which includes the development of a north adit (horizontal
shaft). The colliery is in the process reassessing options
regarding the design of the planned north adit.
Makhado Hard Coking Coal Project - Soutpansberg Coalfield (69%
owned)
The fully permitted Makhado Project recorded no LTIs (FY2020 Q1:
nil) during the Quarter.
MC Mining's flagship Makhado Project has very favourable
economics and the phased development thereof will deliver positive
returns for shareholders. Makhado has a LOM in excess of 46 years
comprising a nine-year Phase 1 LOM and Phase 2, which will be mined
for more than 37 years.
The Company made significant progress in the development of
Makhado during CY2019, including securing off-take agreements for
the Phase 1 HCC and thermal coal by-product and the construction of
the project will position MC Mining as South Africa's pre-eminent
HCC producer.
The Makhado Phase 1 construction comprises the development the
west pit and modifications to the existing Vele Colliery processing
plant and the funding required is some R700 million ($52 million)
and includes the settlement of the existing 2017 IDC loan facility.
The Company has progressed the fund raising initiatives to secure
the funding for the construction of Phase 1 and anticipates that
this will be completed in H1 CY2020 followed by a nine-month
construction period, with first coal sales in H1 CY2021. The
initial step in the Phase 1 composite debt/equity funding process
was the conclusion of a conditional R245 million ($17.0 million)
term loan facility from the Industrial Development Corporation of
South Africa Limited ("IDC"). The Company is in the process of
various initiatives to raise the balance, including positive
discussions with debt providers, current shareholders and potential
new shareholders at both group and project level.
Phase 1 is a critical step in the development of Phase 2 of the
Makhado Project, which also has significant positive economics, and
the Company has already secured off-take agreements for circa 50%
of the approximately 0.8 million tonnes per annum of Phase 2
HCC.
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 (FY2020 Q1:
nil).
There were no further developments to report during the Quarter
and the Vele processing plant is expected to be refurbished and
recommissioned as part of Phase 1 of the Makhado Project
Greater Soutpansberg Project - Soutpansberg Coalfield (74%
owned)
The GSP recorded no LTIs (FY2020 Q1: nil) during the Quarter.
The GSP is located within close proximity to the Musina-Makhado
Special Economic Zone, an area designated by government to focus
on, amongst others, energy and metallurgical industries.
The Chapudi, Mopane and Generaal Projects comprise MC Mining's
longer-term coking and thermal coal GSP. The mining right
applications for the three project areas were submitted to the DMR
during 2013 with the Chapudi Project mining right granted in
December 2018. The Generaal Project contains over 407 million gross
tonnes in situ of inferred coal resources and was granted a mining
right by the DMR during the Quarter. The Mopane Project mining
right application is at an advanced stage and the Company is
hopeful that the granting thereof will occur in the near
future.
Markets
The slowdown in the global economy during CY2019 continues to
adversely affect metallurgical coal markets with average premium
HCC prices during the Quarter of $139/t (FY2019 Q2: $223/t).
However, HCC prices trended positively post Quarter-end increasing
to $149/t in January 2020. Increased international demand for South
African thermal coal resulted in more favorable prices for Uitkomst
coal, with average API4 thermal coal prices improving from $61/t in
Q1 FY2020 to $76/t during the Quarter (FY2019 Q2: $96/t).
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:
Ross Allister/David McKeown Nominated Adviser and Broker Peel Hunt LLP +44 20 7418 8900
Charmane Russell/Olwen Auret 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 coal),
Makhado Project (coking and thermal coal). 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.
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
Project Name Tenement Number Location Interest Change during Quarter
------------------------------ ------------------------------- ---------------- --------- ----------------------
Chapudi Project* Albert 686 MS Limpopo 74%
Bergwater 712 MS 74%
Remaining Extent and Portion 2
of Bergwater 697 MS 74%
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1
of Bluebell 480 MS 74%
Remaining Extent & Portion 1
of Bushy Rise 702 MS 74%
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1,
3 & 4 of Coniston 699 MS 74%
Driehoek 631 MS 74%
Remaining Extent of
Dorps-rivier 696 MS 74%
Enfield 512 MS (consolidation
of Remaining Extent of
Enfield 474 MS, Brosdoorn 682
MS & Remaining
Extent of Grootvlei 684 MS) 74%
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 2,
Remaining Extent of Portion
3, Portions 1,
4, 5, 6, 7 & 8 of Kliprivier
692 MS 74%
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 MS 74%
Remaining Extent & Portion 1
of Prince's Hill 704 MS 74%
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Remaining Extent & Portion 1
of Ridge End 662 MS 74%
Remaining Extent & Portion 1
of Rochdale 700 MS 74%
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687
MS 74%
Sandstone Edge 658 MS 74%
Remaining Extent of Portions 2
& 3 of Sterkstroom 689 MS 74%
Sutherland 693 MS 74%
Remaining Extent & Portion 1
of Varkfontein 671 MS 74%
Remaining Extent, Portion 2,
Remaining Extent of Portion 1
of Vastval 477 MS 74%
Vleifontein 691 MS 74%
Ptn 3, 4, 5 & 6 of Waterpoort
695 MS 74%
Wildebeesthoek 661 MS 74%
Woodlands 701 MS 74%
------------------------------- ----------------------------------------------- --------- ----------------------
Kanowna West and
Kalbara M27/41 Coolgardie^ 2.99%
----------------
M27/47 2.99%
-----------------------------------------------
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 Royalty ML63/409,410 Norseman^ Royalty
------------------------------ ------------------------------- ---------------- --------- ----------------------
Kookynie Royalty ML40/061 Leonora^ Royalty
------------------------------
ML40/135,136 Royalty
------------------------------ ------------------------------- ---------------- --------- ----------------------
Makhado Project Fripp 645 MS Limpopo 69%(#)
Lukin 643 MS 69%(#)
Mutamba 668 MS 69%(#)
Salaita 188 MT 69%(#)
Tanga 849 MS 69%(#)
Daru 848 MS 69%(#)
Windhoek 847 MS 69%(#)
Generaal Project* Beck 568 MS-- Limpopo 74%
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 587 MS- 74%
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 Stuart 153 MT-- 100%
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 155 MT-- 100%
Van Deventer 641 MS- 74%
Wildgoose 577 MS- 74%
------------------------------- ----------------------------------------------- --------- ----------------------
Mopane Project* Ancaster 501 MS-- Limpopo 100%
Banff 502 MS- 74%
Bierman 599 MS- 74%
Cavan 508 MS 100%
Cohen 591 MS-- 100%
Remaining Extent, Portions 1 &
2 of Delft 499 MS- 74%
Dreyer 526 MS-- 74%
Remaining Extent of Du Toit
563 MS- 74%
Faure 562 MS 74%
Remaining Extent and Portion 1
of Goosen 530 MS -- 74%
Hermanus 533 MS- 74%
Jutland 536 MS-- 100%
Krige 495 MS- 74%
Mons 557 MS- 100%
Remaining Extent of Otto 560
MS (Now Honeymoon)- 74%
Remaining Extent & Portion 1
of Pretorius 531 MS- 74%
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 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 74%
Remaining Extent of Verdun 535
MS- 74%
Voorburg 503 MS- 100%
Scheveningen 500 MS- 74%
Uitkomst Colliery and Portion 3 (of 2) of
prospects Kweekspruit No. 22 KwaZulu-Natal 70%
Portion 8 (of 1) of
Kweekspruit No. 22 70%
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. 151 70%
Remainder of Portion 2 of
Rustverwacht No. 151 70%
Remainder of Portion 3 (of 1)
of Rustverwacht No. 151 70%
Portion 4 (of 1) Rustverwacht
No.151 70%
Portion 5 (of 1) Rustverwacht
No. 151 70%
Remainder of Portion 6 (of 1)
of Rustverwacht No. 151 70%
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 No. 151 70%
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. 178 70%
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%
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. 414 70%
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%
Portions of Overvlakte 125 MS
(Remaining Extent, 3, 4, 5,
Vele Colliery and prospects 6, 13, 14) Limpopo 100%
Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
------------------------------- ----------------------------------------------- --------- ----------------------
Certain portions of Unsurveyed
Tshikunda State Land known as Mutale Limpopo 60%
------------------------------ ------------------------------- ---------------- --------- ----------------------
* Form part of the Greater Soutpansberg Projects
- Lapsed - Mining Right Application Lodged
-- Valid - Mining Right Application Lodged
Tenement located in the Republic of South Africa
^ Tenement located in Australia
(#) MC Mining's interest will reduce to 69% on completion of the
26% Broad Based BEE transaction
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDKKOBKABKDCDB
(END) Dow Jones Newswires
January 28, 2020 02:00 ET (07:00 GMT)
Mc Mining (LSE:MCM)
Historical Stock Chart
From May 2024 to Jun 2024
Mc Mining (LSE:MCM)
Historical Stock Chart
From Jun 2023 to Jun 2024