TIDMMCM
RNS Number : 2801A
MC Mining Limited
01 February 2022
1 February 2022
Capital Raising US$5.6 million
MC Mining Limited (MCM or the Company) is pleased to announce it
has entered into a staged ZAR86,036,691 (86 million South African
Rand) (approximately US$5.6 million/A$7.9 million) Convertible
Advance and Subscription Agreement (the Agreement) with South
African based mining group, Senosi Group Investment Holdings
Proprietary Limited (SGIH).
Pursuant to the Agreement, the initial share subscription by
SGIH is limited to 38,363,909 new ordinary shares of no par value
in the Company's capital (Ordinary Shares) (the First Tranche
Shares) to be issued at ZAR1.20 (US$0.08/ A$0.11) per share (the
Issue Price), to raise ZAR46,036,691 in equity (the First Tranche
Funding) and, subject to certain regulatory approvals, will result
in SGIH owing 19.9% of the Company's issued shares.
SGIH has also conditionally agreed to subscribe for a second
tranche of 33,333,333 new Ordinary Shares (the Second Tranche
Shares) (together with the First Tranche Shares, the Placement
Shares) at the Issue Price, raising the balance of ZAR40,000,000
(the Second Tranche Funding), which, subject to the receipt of all
required approvals, will result in SGIH holding an aggregate
interest in the Company's enlarged share capital of approximately
31.71% (assuming no further shares are issued in the interim).
The Issue Price equates to a 7.1% premium to the Company's
closing price as quoted on the JSE on Monday 31 January 2022.
The issue of the Placement Shares by the Company to SGIH is
subject to certain customary approvals by the ASX and JSE, and
conditional on the prior approval of South Africa's Reserve Bank,
which is expected to take several weeks. Furthermore, the issue of
the Second Tranche Shares will require the prior approval of
Company's shareholders as the combined interest of SGIH, will
result in a combined ownership interest in MCM exceeding 20%. The
Notice of Meeting will include a report from an independent expert
to opine on whether the issue of the Placement Shares is fair and
reasonable to non-associated shareholders.
Accordingly, given the anticipated lead time for obtaining the
abovementioned South African Reserve Bank and MCM shareholder
approval, SGIH has agreed to advance funds to the Company by the
way of a loan, which will subsequently convert into the First
Tranche Shares on the later of the date falling 5 business days
following the date on which the final instalment of the First
Tranche Funding has been advanced and the date on which the
relevant approvals have been obtained. The first two instalments of
the Second Tranche Funding will also be advanced as a loan and
Second Tranche Shares will be issued as and when the requisite
approvals have been obtained. If the relevant approvals have not
been obtained on or before 29 June 2022, the final 2 instalments of
the Second Tranche Funding will not be advanced, and the loans will
become repayable as set out below. The timing and amount of loan
funds to be provided by SGIH is as set out below:
First Tranche Funding:
Date ZAR
The first business day following the effective date
of the Agreement (anticipated to be the first week
of February 2022) 10,000,000
-----------
23 February 2022 30,000,000
-----------
31 March 2022 6,036,691
-----------
Total 46,036,691
-----------
As stated above the total ZAR46,036,691 SGIH loan will convert
to the First Tranche Shares once the total First Tranche Funding
has been advanced, provided that South African Reserve Bank
approval has been obtained. The First Tranche Funding is secured
against shares in MCM's wholly owned subsidiaries, Limpopo Coal
Company (Pty) Ltd and Harissa Investment Holdings (Pty) Ltd . This
security will be released when the First Tranche Funding is repaid
or the First Tranche Shares are issued. The Second Tranche Funding
will not be secured.
Second Tranche Funding:
Date ZAR
30 April 2022 10,000,000
-----------
31 May 2022 10,000,000
-----------
30 June 2022 10,000,000
-----------
31 July 2022 10,000,000
-----------
Total 40,000,000
-----------
As stated above, the total ZAR40,000,000 Second Tranche Funding
will convert to the Second Tranche Shares as and when South African
Reserve Bank approval is obtained and the necessary shareholder
approval is received. To the extent that the aforementioned
approvals are obtained prior to the abovementioned dates, the
relevant Placement Shares will be issued in tranches directly to
SGIH against payment of the subscription amounts at the Issue
Price.
The First Tranche Funding will be used to settle the balance
owing to the vendors of the Lukin and Salaita properties, due by 28
February 2022, as announced on 11 January 2022, and to supplement
the MCM group working capital requirements.
The Second Tranche Funding will be used to advance development
of the Makhado hard coking coal project and to supplement the MCM
group's working capital requirements. Based on prevailing forward
API4 coal prices and management of Group facilities, the funding
from SGIH is expected to extend the cash runway to at least August
2022.
It is important to note that the conversion of the Second
Tranche Funding is expressly subject to shareholder approval,
including under the ASX Listing Rules and item 7 of section 611 of
the Corporations Act 2001.
SGIH is a substantial mining house with investments in coal
mining, contract mining, commodity trading, gold mining, energy,
engineering and property.
SGIH 's coal mining interests are held through its wholly owned
subsidiaries, which produce over eight million tons of run of mine
(ROM) coal per year and are targeting to increase ROM production to
12 million tons in 2022. SGIH's group companies supply
approximately 4 million tonnes of coal per annum to the local
electricity utility Eskom and exports 3.5 million tonnes of coal
per annum through the Richards Bay Coal Terminal. SGIH controls
over 300 million tonnes of coal Resources and Reserves through its
coal mining subsidiaries. All SGIH 's collieries are located in the
Highveld and Witbank Coalfields of the Mpumalanga Province of South
Africa.
The SGIH group chief executive officer and controlling
shareholder is Mr Ontiretse Mathews Senosi. Mr Senosi is, subject
to completion of the relevant regulatory and customary due
diligence processes, to be appointed a director of the Company on
completion of the issue of the First Tranche Shares. A further
announcement will be made in this regard in due course.
Mr Senosi is a mining engineer having completed his degree and
also a Graduate Diploma in Engineering at the University of the
Witwatersrand in South Africa. He gained experience at Anglo Coal
before pursuing his own business interests. He has substantial
experience in mining engineering consulting, feasibility studies,
mine optimisation projects and several civil, building and
construction contracts for over 20 years. Since 2008, Mr Senosi is
also an experienced company director of various companies including
underground mine contractors.
Mr Bernard Pryor, MC Mining's Chairman, commented :
"We are very pleased Mr Senosi has agreed to invest in our
Company and to also join our board of directors. His successful
track record of developing and operating coal mines in South Africa
will be invaluable as we move closer to finalising the funding
requirements to develop our flagship Makhado project."
The more detailed terms of the Convertible Advance and
Subscription Agreement are as follows:
material terms of Convertible Advance and Subscription
Agreement
Name of Contract Convertible Advance and Subscription Agreement
Parties MC Mining Limited (MCM) as Guarantor,
MCM's subsidiaries, Limpopo Coal Company
Proprietary Limited as borrower (Borrower)
and Harrisia Investment Holdings Proprietary
Limited, and Senosi Group Investment Holdings
Proprietary Limited as lender and subscriber
-----------------------------------------------------------
Execution On or around 31 January 2022
-----------------------------------------------------------
Loan ZAR86,036,691 or approximately A$7.9 million
-----------------------------------------------------------
Use of Loan The ZAR46,036,691 first tranche: Principally
required for MCM to make payment of the
sum of ZAR35,000,000 under a deferred
payment arrangement for land acquired
under a sale and purchase agreement due
on 28 February 2022. The balance of ZAR11,036,691
will be used for working capital; and
The ZAR40,000,000 second tranche: Principally
required to advance development of the
Makhado hard coking and thermal coal project
and for working capital.
-----------------------------------------------------------
Interest The Loan is interest free, unless the
relevant approvals required in order to
issue the Placement Shares are not obtained
in which event the loans will bear interests
at the South African prime rate.
-----------------------------------------------------------
Condition of Conversion The first tranche of ZA46,031,691 is to
convert into shares in the Company, subject
to ASX, AIM and JSE approval, only after
South Africa's Reserve Bank approval has
been obtained and the full amount of the
first tranche has been advanced to the
Borrower. The second tranche of ZAR40,000,000
is to convert into shares in the Company
only after South Africa's Reserve Bank
and all other required shareholder and
regulatory approvals, including under
the ASX Listing Rules and section 611
of the Corporations Act 2001, have been
obtained.
-----------------------------------------------------------
Conversion Subject to all applicable laws and required
approvals, and except as otherwise provided,
providing the Loans remain outstanding,
the Loans shall convert into MCM Shares
as soon as reasonably practicable following
the date on which the applicable conditions
are satisfied and the number of MCM Shares
to be issued shall be determined by dividing
the principal amount of the Loan outstanding
to be converted by ZAR1.20.
-----------------------------------------------------------
Conversion/ Repayment The Loans will convert when the respective
Date conditions for conversion have been satisfied
as set out above, provided that;
(a) If the first tranche conversion condition
has not been satisfied on or before 29
June 2022 or such later date agreed by
the parties, that loan plus interest shall
be repaid 30 calendar days thereafter;
and
(b) If the second tranche conversion conditions
have not been satisfied on or before 29
June 2022 , or such later date agreed
by the parties, that loan plus interest
shall be repaid 30 calendar days thereafter.
-----------------------------------------------------------
Placement To the extent that the required approvals
for the issue of the Placement Shares
are obtained prior to the date on which
any portion of Loan is the be advanced
by SGIH, SGIH has agreed to directly subscribe
for the Placement Shares in tranches on
the same basis as the Loans were to be
advanced.
-----------------------------------------------------------
Security As security for the repayment of the first
tranche, the Company has agreed:
(a) to pledge and cede in security all
of its right title and interest in and
to its shares in the Borrower and its
wholly owned group company, Harissa Investment
Holdings (Pty) Ltd. Enforcement by SGIH
will be subject to compliance with the
requirements of the Mineral and Petroleum
Resources Development Act or other regulatory
approvals, as applicable; and
(b) to subordinate the intercompany loans
in the Borrower and Harrisia in favour
of SGIH.
The security will be released as soon
as the first tranche is repaid or converted.
The second tranche will not be secured.
-----------------------------------------------------------
Note:
Exchanged rates used in this announcement are:
US$1.00 = ZAR15.24
A$1.00 = ZAR10.90
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014 as amended by the Market Abuse
(Amendment) (EU Exit) Regulations 2019.
This announcement has been approved by the Company's disclosure
committee.
ASX: MCM / AIM: MCM.L / JSE: MCZ
For more information contact:
Sam Randazzo Interim Chief Executive Officer MC Mining Limited +61 408 945010
Tony Bevan Company Secretary Endeavour Corporate Services +618 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).
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END
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February 01, 2022 01:59 ET (06:59 GMT)
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