MC Mining Limited IDC Loan Update (5888O)
February 10 2021 - 2:22AM
UK Regulatory
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RNS Number : 5888O
MC Mining Limited
10 February 2021
ANNOUNCEMENT
10 February 2021
IDC LOAN UPDATE
MC Mining Limited ("MC Mining" or the "Company") is pleased to
announce that the Industrial Development Corporation of South
Africa Limited ("IDC") ha s extended the date for repayment of the
R160 million loan ($10.3 million) plus interest owing by a
subsidiary of the Company, to 31 July 2021. The Company is also
pleased to announce that the IDC has agreed to extend the terminal
draw down date in respect of the conditional R245 million ($15.8
million) term loan facility agreed to partially finance the
development of Phase 1 of the Makhado hard coking coal project
("Makhado Project" or "Makhado") , to 31 July 2021, subject to the
IDC reaffirming its financial due diligence .
The IDC has provided longstanding support for the development of
the Company's flagship, fully permitted Makhado Project . MC Mining
initially utilised R120 million ($7.7 million) ("First Drawdown")
of a R240 million ($15.5 million) IDC facility to progress the
Makhado Project to fully permitted status and c omplete the
acquisition of the surface rights required for the mining area.
During August 2020, the Company and the IDC restructured that IDC
Facility and MC Mining drew down an additional R40 million ($2.6
million) ("Second Drawdown") and the remaining R80 million ($5.2
million) undrawn balance was cancelled. The First and Second
Drawdowns resulted in the IDC becoming a 6.7% shareholder in MC
Mining subsidiary, Baobab Mining & Exploration (Pty) Ltd, which
owns the Makhado Project.
The First and Second D rawdowns of R160 million ($10.3 million)
plus accrued interest were originally due for repayment by 30
November 2020. As previously announced, MC Mining submitted a
formal application to extend the repayment date and the IDC has now
agreed to extend the repayment date to 31 July 2021. The Company
and IDC will however continue discussions with the objective of
scheduling the repayment of the First Drawdown to align with the
positive cash flows generated by the project, whilst repaying the
Second Drawdown from the proceeds raised to construct Phase 1. In
the unlikely event that the parties cannot reach agreement on
further deferment terms or the Company does not repay the loan by
the repayment date, the financing documentation allows for the debt
to be converted into equity.
Background
Makhado has a life of mine in excess of 46 years and robust
fundamentals, resulting in compelling economics. The phased
development of Makhado will position MC Mining as South Africa's
pre-eminent hard coking coal producer and is expected to deliver
positive returns for shareholders. The Company has made significant
progress securing the funds required to construct Phase 1, t hat
would create more than 650 direct, permanent job opportunities and
reduce the volumes of hard coking coal South Africa currently
imports.
Phase 1 comprises the construction of the Makhado west pit and
modifications to the existing Vele Colliery processing plant to
process the screened and scalped Makhado run-of-mine coal. The
total funding required is approximately R575 million ($37.1
million), including the repayment of the Second Drawdown.
MC Mining previously secured a conditional R245 million ($15.8
million) term loan facility from the IDC (the "Term Loan"), the
initial step in the composite Phase 1 debt/equity funding process.
This terminal draw down date for the Term Loan has also been
extended to 31 July 2021 subject to the IDC reaffirming their
financial due diligence. As previously announced, the Company has
also secured in-principle agreements with various other parties for
a further R200 million ($12.9 million) for Phase 1 that are subject
to agreement of final documentation. It is also in advanced
discussions with potential equity funders for the remaining R130
million ($8.4 million) and anticipates that these will be finalised
during Q1 CY2021.
Brenda Berlin , Acting CEO commented :
"The IDC's extension of the Initial IDC Facility, as well as the
terminal draw down date for the Term Loan, reiterates their support
for the development of the Makhado Project. The Company continues
to make progress on the initiatives to secure the remaining funding
for Phase 1 and anticipates that these will be completed during Q1
CY2021, followed by a nine-month construction period and first coal
sales in H1 CY2022. Phase 1 has an internal rate of return in
excess of 40% and a payback of less than 2.5 years, supported by
favourable long-term hard coking coal markets and driven by
forecast growth in worldwide steel demand."
Brenda Berlin
Acting Chief Executive Officer
This announcement has been approved by the Company's Disclosure
Committee.
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
All figures are in South African rand or United States dollars
unless otherwise stated.
For more information contact:
Brenda Berlin Acting Chief Executive Officer MC Mining Limited +27 10 003 8000
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).
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.
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