TIDMMCM
RNS Number : 7326Q
MC Mining Limited
29 October 2021
ANNOUNCEMENT
29 October 2021
ACTIVITIES REPORT FOR THE QUARTERED 30 SEPTEMBER 2021
FOR
MC Mining Limited (" MC Mining" or the "Company") and its
subsidiary companies
HIGHLIGHTS
-- Health and safety remains a priority and two lost-time
injuries (LTI) were recorded during the quarter (FY2021 Q4: one
LTI);
-- Measures previously implemented to restrict the spread of the
COVID-19 virus at the various group workplaces remain in place.
During the quarter, 14 employees (Q4 FY2021: two) contracted the
virus;
-- A COVID-19 vaccination programme was implemented at the high
grade Uitkomst metallurgical and thermal coal mine (Uitkomst
Colliery or Uitkomst) during the Quarter resulting in over 71% of
Uitkomst's employees now being vaccinated;
-- Operations at the Uitkomst Colliery were suspended for four
days in July due to civil unrest in the KwaZulu-Natal province;
-- Run-of-mine (ROM) coal production at Uitkomst was 12% lower
than the September 2020 quarter (120,260 tonnes (t) vs. FY2021 Q1:
137,284t), mainly due to the shutdown caused by civil unrest;
-- 70,545t of coal sales during the quarter (FY2021 Q1: 57,616t)
comprising 67,673t (FY2021 Q1: 54,877t) of high grade metallurgical
and thermal coal and 5,872t (FY2021 Q1: 2,739t) of lower grade
middlings coal;
-- Revenue per tonne increased by 86% to $108/t (FY2021 Q1:
$58/t) due to the much higher API4 coal prices recorded during the
quarter ($139/t vs. FY2021 Q1 $55/t);
-- A prepayment facility of R29.7 million ($2.1 million) was
agreed 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;
-- 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;
-- The Industrial Development Corporation of South Africa
Limited (IDC) agreed to extend the repayment date for the R160
million ($11.3 million) loan plus accrued interest to 31 January
2022;
-- The terminal drawdown date of the additional R245 million
($17.3 million) IDC term loan for the development of Phase 1 of
Makhado, was also extended to 31 January 2022, subject to the IDC
re-affirming its financial due diligence;
-- Makhado Project composite debt/equity funding initiatives,
including detailed due diligence processes by potential funders,
continued during the quarter; and
-- Available cash at quarter-end was $3.5 million ($3.2 million
at 30 June 2021) and restricted cash was $0.03 million.
COMMENTARY
The IDC reaffirmed their support for the Makhado Project by
formally extending the repayment date of the existing R160 million
($11.3 million) loan to 31 January 2022. The IDC also agreed to
extend the terminal draw down date for the conditional R245 million
($17.3 million) Makhado Project development term loan facility, to
31 January 2022, subject to confirming its due diligence. If the
Company does not repay the loan by 31 January 2022 and further
extensions are not granted, the existing IDC facility may be
converted into equity of MC Mining or its subsidiary, Baobab Mining
and Exploration (Pty) Ltd.
A number of parties are continuing their due diligence review
for providing the balance of the funding required by the Company to
develop Makhado. MC Mining remains confident that the parties
taking part in the process will commit the necessary funds to
complete the funding package, anticipated to be finalised during Q1
CY2022 with construction commencing in the following quarter. The
Company is progressing several alternative strategies to raise
additional funding including, but not limited to, the issue of new
equity for cash in MC Mining or subsidiary companies, or further
debt funding. Whilst the aforementioned funding discussions are
expected to be subject to successful negotiations, there can be no
guarantee that any such discussions will be concluded, or as to the
timing or terms of such funding.
COVID-19
The health and safety of the MC Mining group's employees and its
contractors is a priority and measures previously implemented to
restrict the spread of COVID-19 remain in place. During the
quarter, 14 Uitkomst employees tested positive for the virus
(FY2021 Q4: two positive tests). No positive COVID-19 cases were
reported at the Makhado, Vele and GSP projects.
Uitkomst Colliery - Utrecht Coalfields (70% owned)
Two LTIs recorded during the quarter (FY2021 Q4: one LTI).
The Uitkomst Colliery generated 120,260t of ROM coal during the
quarter, 12% lower than the comparative Q1 FY2021. The decline is
attributable to the four-day suspension of operating activities due
to civil unrest and one of the underground mining sections
encountering three dykes during the quarter.
Sales of high grade duff and peas were 18% higher than the
FY2021 comparative period (64,673t vs. 54,877t) as prior year
volumes were adversely affected by the delayed orders following the
lifting of the COVID-19 lockdown. Uitkomst also sold 5,872t of high
ash middlings coal during the quarter (FY2021 Q1: 2,739t). Volumes
were augmented by the disposal of coal stockpiles and Uitkomst had
3,164t of saleable coal on hand at the end of the quarter compared
to 8,753t carried at the beginning of the quarter.
The global economic recovery from the pandemic resulted in
higher demand for coal and this was accompanied by supply shortages
and logistics constraints. As a result, the API4 export coal price
continued to improve and average prices for the three months were
153% higher ($139/t vs $55/t) and, as a consequence, Uitkomst's
average revenue per tonne increased by 86% to $108/t (FY2021 Q1:
$58/t). This price improvement was somewhat offset by the
strengthening of the South African rand against the US dollar
(FY2022 Q1: R14.62 vs. FY2021 Q1: R16.91 to US$1.00).
Production costs per saleable tonne increased 28% to $76/t
(FY2020 Q4: $60/t) during the quarter due to the lower volumes
mined and the strengthening of the South African rand against the
US dollar.
Quarter to end-Sept Quarter to end-Sept
2021 2020 %
Production tonnages
Uitkomst ROM (t) 120,260 137,284 (12%)
Sales tonnages
High quality duff and peas
(t) 64,673 54,877 18%
Middlings sales (t) 5,872 2,739 114%
70,545 57,616 22%
Quarter financial metrics
Revenue/t ($) 108 58 86%
Revenue/t (ZAR) 1,578 981 61%
Production cost/saleable tonnes
($)^ 76 60 28%
---------------------------------- --------------------- --------------------- -------
^ costs are all South African Rand based
To supplement working capital and to take advantage of higher
prices, 16,500t of coal was presold realising R29.7 million ($2.1
million), which is to be delivered at the rate of 2,750t per month
from September 2021 to February 2022.
Makhado Hard Coking Coal Project - Soutpansberg Coalfield (67%
owned post BBBEE transaction)
The fully permitted Makhado Project recorded no LTIs (FY2021 Q4:
nil) during the quarter.
MC Mining's flagship Makhado Project has 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 financial support for the
development of the Makhado Project and MC Mining has utilised an
IDC loan of R160 million ($11.3 million) 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 existing
R160 million loan plus interest, to 31 January 2022. The IDC also
agreed to extend the terminal draw down date in respect of the
conditional R245 million ($17.3 million) term loan facility for the
development of the Makhado Project, to 31 January 2022, subject to
confirming its financial due diligence. The Company and IDC are
also continuing discussions with the objective of aligning
repayment of the IDC facilities with the positive cash flows
generated by Makhado.
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 Q4:
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 Q4: nil) during the quarter and no
reportable activities occurred during the period.
Markets
The global economy continued to improve during the quarter,
resulting in increased demand for coal. This led to a rise in the
price of quality South African export thermal coal, with API4
prices improving to $139/t compared to $55/t recorded in Q1 FY2021
(FY2021 Q4: $105/t). Demand for hard coking coal also increased
with average prices of $250/t compared to $112/t in Q1 FY2021.
Appendix 5B - Quarterly Cash Flow Report
Available cash as at 30 September 2021 was $3.5 million. The
aggregate amount of payments to related parties and their
associates as disclosed at item 6.1 of the September quarter
Appendix 5B was $216k, comprising executive director
remuneration.
Attention is drawn to the disclosure in MC Mining's annual
results for the year ended 30 June 2021, published by the Company
on 30 September 2021, 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.
In order to meet its working capital requirements, the 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 the debt and equity raise is by its nature an
involved process and is subject to successful negotiations with the
external funders and shareholders. Any equity raise is likely to be
subject to a due diligence process. The Group has a history of
successful capital raisings to meet the Group's funding
requirements.
Sam Randazzo
Chief Executive Officer
This announcement has been approved by the Company's Disclosure
Committee.
For more information contact:
Sam Randazzo CEO Endeavour Corporate +61 408 945010
Tony Bevan Company Secretary 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
Financial PR (South
James Duncan 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 during
Project Name Tenement Number Location Interest 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 M27/41 Coolgardie^ Royalty<> (2.99%)
----------------
M27/47 Royalty<> (2.99%)
---------------------------------------
M27/59 Royalty<> (2.99%)
M27/72,27/73 Royalty<> (2.99%)
M27/114 Royalty<> (2.99%)
M27/196 Royalty<> (2.99%)
M27/414,27/415 Royalty<> (2.99%)
P27/1826-1829 Royalty<> (2.99%)
P27/1830-1842 Royalty<> (2.99%)
P27/1887 Royalty<> (2.99%)
----------------------------------------- --------------------------------------- ---------- --------------
Kalbara M27/181 6.79% (0.45%)
---------------------- ----------------------------------------- ---------------- ---------- --------------
Abbotshall ML63/409,410 Norseman^ Royalty
Royalty
---------------------- ----------------------------------------- ---------------- ---------- --------------
Kookynie ML40/061 Leonora^ Royalty
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 889 MS 69%(#)
Windhoek 900 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 Portion 3 (of 2) of Kweekspruit
and prospects 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
Vele Colliery (Remaining Extent, 3, 4, 5,
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
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
<> net smelter royalty of 0.5%
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