TIDMMCM
RNS Number : 6361N
MC Mining Limited
30 September 2021
ANNOUNCEMENT 30 September 2021
RESULTS FOR THE FULL YEARED 30 JUNE 2021
MC Mining Limited ("MC Mining" or the "Company") is pleased to
provide its audited financial statements for the year ended 30 June
2021 (the "Period"). All figures are denominated in United States
dollars unless otherwise stated and the full report is available on
the Company's website, www.mcmining.co.za .
Financial review
-- The loss after tax for the Period reduced to $11.8 million or
7.76 cents per share (FY2020: loss after tax of $12.2 million or
8.55 cents per share);
-- Contributing to the loss of $11.8 million were non-cash
charges of $9.6 million (FY2020: $4.3 million) which includes the
following:
o net impairment expense of $6.8 million (FY2020: $1.3
million)
o depreciation and amortisation of $2.6 million (FY2020: $2.6
million)
o share based payment expense of $0.2 million (FY2020: $0.4
million).
-- Revenue of $20.7 million (FY2020: $17.2 million) and cost of
sales of $20.3 million (FY2020: $18.3 million) resulted in a gross
profit of $0.4 million (FY2020: gross loss of $1.1 million) for the
Period;
-- Operating cash flows of $1.7 million generated by the
Uitkomst metallurgical and thermal colliery ("Uitkomst" or
"Uitkomst Colliery") ;
-- The Vele semi-soft coking and thermal coal colliery ("Vele
Colliery" or "Vele") remained on care and maintenance and the
carrying value of the colliery was assessed during the Period,
resulting in an impairment of $6.5 million (FY2020: nil);
-- A reduction in the number of employees and general overhead
expenses resulted in administrative expenses declining by $2.3
million, or 31% on FY2020 ;
-- Net interest expense arising from borrowings and finance
leases reduced to $1.6 million (FY2020: $3.2 million);
-- The Company issued 13,331,433 new shares raising $1.0 million in August 2020;
-- An additional $2.8 million (ZAR40 million) was drawn from the
previously available R240 million ($16.8 million) Industrial
Development Corporation (IDC) facility increasing the total drawn
down amount to R160 million ($11.2 million) and the undrawn balance
of R80 million ($5.6 million) was cancelled;
-- The repayment date of the R160 million ($11.3 million) IDC
loan was extended to 31 January 2022 (previously due 31 July
2021);
-- If the Company does not repay the loan by the repayment date
(31 January 2022) and any further extension is not granted, the IDC
Facility may be converted into equity of MC Mining or its
subsidiary, Baobab Mining and Exploration (Pty) Ltd; and
-- Unrestricted cash balances at year-end of $3.2 million (FY2020: $2.7 million).
Operational review
-- Health and safety remains the highest priority and there were
no fatalities (FY2020: nil) and six lost-time injuries ("LTIs")
recorded during the Period (FY2020: nine LTIs);
-- Measures were implemented to restrict the spread of the
COVID-19 virus within the MC Mining group workplace, with one
unfortunate fatality of a contractor's employee, while 39 employees
(FY2020: nil) contracted the virus during the Period;
-- Uitkomst Colliery operational results:
FY2021 FY2020 % r
Production tonnages
Uitkomst ROM (t) 490,100 431,354 14%
Sales tonnages
Own ROM (t) 265,879 228,206 17%
Middlings sales 26,382 25,987 2%
292,261 254,193 15%
Financial metrics
Revenue/t($) 70 65 8%
Production costs/saleable tonnes ($)^ 60 63 (5%)
--------------------------------------- -------- -------- -----
^all costs are incurred in Rand
-- The Uitkomst colliery produced 490,100 tonnes (t) (FY2020:
431,354 t) of run of mine ("ROM") coal during the twelve months to
30 June 2021, up 14% on the previous year;
-- Uitkomst sold 292,261t of coal in FY2021 (FY2020: 254,193t)
comprising 265,879t (FY2020: 228,206t) of premium duff and sized
peas and 26,382t (FY2020: 25,987t) of middlings (high ash, coarse
discard coal) - generating sales revenue of $20.7 million (FY2020:
$17.2 million);
-- The API4 coal price improved during FY2021, increasing from
$53/t in July 2020 to $115/t at the end of the 2021 financial
year;
-- Uitkomst's production costs per saleable tonne reduced by 5%
to $60/t (FY2020: $63/t) as a result of cost containment measures
and increased production;
-- Makhado hard coking coal project ("Makhado Project" or
"Makhado") composite debt/equity funding initiatives continued
during the Period with a number of parties undertaking due
diligence;
-- Activities at the Company's Vele Colliery and Greater
Soutpansberg Projects ("GSP") were limited during FY2021 to contain
costs. The Vele processing plant is to be refurbished and
recommissioned as part of Phase 1 of the Makhado Project; and
-- The Department of Mineral Resources & Energy granted the
mining right for the Mopane Project, the third and final mining
right which completes the compilation of the total GSP project
area.
Corporate features
-- Non-executive director, Mr Sam Randazzo was appointed as
Interim Chief Executive Officer ("CEO") of the MC Mining Group
following the resignation of Ms Brenda Berlin in February 2021.
Going concern
Attention is drawn to the disclosure in the annual financial
statements on the going concern assumptions (refer note 1 of the
annual financial statements) 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.
The directors are satisfied, however, that at the date of
signing of the financial report, that there are reasonable grounds
to believe that the Group will be able to continue to meet its
debts as and when they fall due and that it is appropriate for the
financial statements to be prepared on a going concern basis. The
directors have based this on a number of assumptions and
strategies, which are set out in detail in note 1 of the annual
financial statements.
In order to meet its working capital requirements, t he 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 any debt and equity raise is by its nature
subject to successful negotiations and therefore there can be no
guarantee that any of the above funding options will be
concluded.
Subsequent events
-- The IDC extended the repayment date for the R160 million
($11.2 million) loan plus accrued interest to 31 January 2022;
-- The terminal drawdown date of the new R245 million ($17.1
million) IDC facility ("New IDC Facility") for the development of
Phase 1 of the Makhado Project was also extended to 31 January
2022, subject to the IDC re-affirming its financial due diligence;
and
-- To supplement working capital, a prepayment of R29.7 million
($2.1 million) was agreed in September 2021 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.
Commentary
The spread of COVID-19 in South Africa in H1 CY2020 had
significant adverse effects on the Company and its customers and
measures implemented to minimise the risk of COVID-19 transmission
remained in place. A weekly government supported vaccination
programme was implemented at Uitkomst and by mid-September,
approximately 70% of the colliery's employees had been
vaccinated.
The Company is pursuing various funding initiatives for the
development of Phase 1 of the Makhado project and a number of
parties are in advanced stages of their due diligence.
MC Mining remains confident that the parties taking part in the
process will commit the necessary funds to complete the Makhado
Phase 1 funding. The IDC also reaffirmed their support for the
Makhado Project by formally extending the repayment date of the
existing loan current IDC facility as well as the terminal draw
down date for the New IDC Facility, to 31 January 2022.
The development of the Makhado Project will result in MC Mining
being the pre-eminent South African producer of hard coking coal, a
key ingredient contributing to the manufacture of steel and a
commodity that trades at a significant premium to thermal coal. The
Makhado Project has a combined life-of-mine in excess of 46 years
and the project's long-term viability is supported by forecast
economic development and urbanisation, driving increases in per
capita steel usage.
Authorised by
Sam Randazzo
Interim CEO
This announcement has been approved by the Company's Disclosure
Committee.
All figures are in South African rand or United States dollars
unless otherwise stated.
For more information contact:
Sam Randazzo Interim Chief Executive Officer MC Mining Limited +61 408 945 010
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 coal),
Makhado Project (hard coking coal). Vele Colliery (semi-soft coking
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.
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END
FR URSNRAUUKOAR
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