TIDMMCM
RNS Number : 5885E
MC Mining Limited
14 March 2022
ABN 98 008 905 388
FINANCIAL REPORT
FOR THE HALF-YEARED
31 DECEMBER 2021
CORPORATE DIRECTORY
REGISTERED OFFICE Suite 8, 7 The Esplanade
Mt Pleasant, Perth, WA 6153
Telephone: +61 8 9316 9100
Facsimile: +61 8 9316 5475
Email: perth@mcmining.co.za
SOUTH AFRICAN OFFICE Suite 7, Building 2
Waverley Office Park
15 Forest Road
Bramley
Johannesburg
2090
Telephone: +27 10 003 8000
Facsimile: +27 11 388 8333
BOARD OF DIRECTORS Non-executive
Khomotso Mosehla (Chairman)
An Chee Sin
Andrew Mifflin
Brian He Zhen
Junchao Liu
Executive
Sebastiano (Sam) Randazzo
COMPANY SECRETARY Tony Bevan
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
AUDITORS Mazars Assurance Pty N/A Mazars
Limited 101 on Olympus
Level 11, 307 Queen Pentagon Park
Street, Brisbane QLD Bloemfontein
4000 South Africa
Australia
BANKERS National Australia ABSA Bank
Bank Limited North Campus
Level 1, 1238 Hay 15 Alice Lane
Street Sandton
West Perth WA 6005 South Africa
Australia
CORPORATE DIRECTORY (CONTINUED)
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
BROKERS N/A Tennyson Securities N/A
65 Petty France
London SW1H 9EU
United Kingdom
LAWYERS STEINEPREIS & PAGANIN N/A WHITE & CASE LLP
Katherine Towers,
Level 4, The Read 1(st) Floor
Buildings 1 Parklane, Wierda
16 Milligan Street Valley
Perth Sandton
WA 6000 2196
Australia Johannesburg
South Africa
NOMINATED ADVISOR/ N/A Strand Hanson Investec Bank Limited
CORPORATE SPONSOR 100 Grayston Drive
26 Mount Row, Mayfair Sandton
London, W1K 3SQ 2196
United Kingdom Johannesburg
South Africa
Index
The reports and statements set out below comprise the half-year
report presented to shareholders:
Contents Page
Directors' Report 4
Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income 9
Condensed Consolidated Statement of Financial Position 10
Condensed Consolidated Statement of Changes in Equity 11
Condensed Consolidated Statement of Cash Flows 12
Notes to the Condensed Consolidated Half-year Report 13
Directors' Declaration 27
Auditor's Independence Declaration 28
Independent Auditor's Review Report 29
MC MINING LIMITED
DIRECTORS' REPORT FOR THE HALF-YEARED 31 DECEMBER 2021
The Directors of MC Mining Limited ("MC Mining" or "the
Company") submit herewith the financial report of MC Mining and its
subsidiaries (the "Group") for the half-year ended 31 December
2021. A ll amounts are expressed in US dollars unless stated
otherwise.
In order to comply with the provision of the Corporations Act
2001, the directors report as follows:
Directors
The names of the directors of the company during or since the
end of the half-year are:
Khomotso Mosehla (Chairman) Bernard Pryor
Sebastiano (Sam) Randazzo* An Chee Sin
Andrew Mifflin Shangren Ding
Brian He Zhen Junchao Liu
* - Executive director
Shangren Ding retired and Junchao Liu was appointed as a
Non-Executive director on 14 December 2021. Bernard Pryor resigned
as Non-Executive Chairman on 11 March 2022. All other directors
held office during and since the end of the previous financial
year.
Review of Operations
Principal activity and nature of operations
The principal activity of the Company and its subsidiaries is
the mining, exploration and development of coking and thermal coal
properties in South Africa.
The Company's principal assets and projects include:
-- Uitkomst Colliery, an operating metallurgical coal mine ("Uitkomst");
-- Makhado Project, a hard coking and thermal coal exploration
and evaluation project (the "Makhado Project" or "Makhado");
-- Vele Colliery, on care and maintenance, a semi-soft coking
and thermal colliery ("Vele Colliery"); and
-- Three exploration stage coking and thermal coal projects,
namely Chapudi, Generaal, and Mopane, in the Soutpansberg Coalfield
(collectively the "GSP Projects").
The Company's focus on safety continued with three lost time
incidents ("LTI's") recorded during the six months under review (H1
FY2021: 4 incidents).
Uitkomst Colliery - Newcastle (Utrecht) (100% owned)
Uitkomst comprises the existing underground coal mine with a
planned life of mine ("LOM") extension directly to the north of
current operations, totalling 15 years remaining LOM. The LOM
extension requires the development of a north adit (horizontal
shaft) and the development is subject to receipt of the regulatory
approvals, available funds and prevailing market conditions.
Uitkomst sells sized coal (peas) products and a 0 to 40mm (duff)
product into the metallurgical domestic market for use as
pulverised coal while the peas are supplied to local energy
generation facilities. In addition, it sells high-ash, coarse
discard ("middlings"), thereby increasing the overall yield from
Uitkomst's ROM coal.
Three LTI's were recorded during the period and 16 positive
COVID-19 cases (H1 FY2021: 27 positive diagnosis).
Production tonnages for the period were 217,228 tonnes. Sales
tonnages were 119,608 tonnes, consisting of 107,953 tonnes of
Uitkomst peas and duff, and 11,655 tonnes of middlings. Revenue for
the period was $13.0 million with a gross profit of $2.1
million.
Makhado Coking Coal Project (93.3% owned; 67.3% post black
empowerment transaction)
MC Mining's flagship Makhado Project is situated in the
Soutpansberg Coalfield in the Limpopo province. All regulatory
approvals are in place and surface rights over the mining and
processing areas have been secured. MC Mining is heavily invested
in the Makhado Project as the complex regulatory environment in
South Africa demanded significant capital investment to achieve its
current shovel ready status.
The initial development (Phase 1) of the project reduces
construction time and execution risk. Phase 1 includes the scalped
and screened Makhado ROM coal being processed at the existing,
modified Vele Colliery plant, producing 0.54 million tonnes per
annum (Mtpa) of hard coking coal and 0.57Mtpa of a thermal coal
by-product. MC Mining has secured offtake agreements for 85% of the
Makhado Phase 1 hard coking coal and all of the thermal coal
by-product.
The lack of support by major international financial
institutions for development of coal projects resulted in MC Mining
reassessing its approach to the development of the Makhado Project
and the Company's has adopted a two-phased development plan. The
initial Phase 1 development reduces the upfront capital
expenditure, shortens the construction period and lowers the
execution risk. Furthermore, it will provide the opportunity for
the project economics to be confirmed and provide the impetus for
progressing to the scaled up Phase 2 development of Makhado.
The development of Phase 2 in circa CY2027, funding and market
dependent, includes the construction of a new processing plant and
related infrastructure. Phase 2 will generate over 1.7Mtpa of
saleable product, including approximately 0.8Mtpa of hard coking
coal.
When in operation, Makhado will be the only significant hard
coking coal producer in South Africa resulting in obvious
advantages for South African steel producers. Development of
Makhado is also expected to have a positive impact on employment
and the general Limpopo province economy resulting in a significant
improvement in living standards for the nearby communities.
The Phase 1 development reduces the construction period to just
nine months, creates approximately 650 permanent jobs when fully
operational and should produce hard coking coal (HCC) and a thermal
coal by-product at the combined rate of 1.1 Mtpa. Phase 2, when
developed should produce coal at the combined rate of 1.6 Mtpa and
provide some 900 job opportunities.
There were no LTIs at the Makhado Project but one COVID-19
positive case in H1 FY2022 (H1 FY2021: no LTIs or COVID-19
cases).
Vele Colliery - Limpopo (Tuli) Coalfield (100% owned)
The Vele Colliery recorded no LTIs during the period or COVID-19
cases and the colliery remained on care and maintenance during the
period.
The Colliery's processing plant will be modified as part of the
Phase 1 of the Makhado Project and Vele's regulatory authorisations
accommodates the requirements of the modifications.
The recommencement of mining at the Vele Colliery is aligned
with the timing of the government gazetted Musina-Makhado Socio
Economic Zone. Compliance with regulatory and licensing
requirements at the Colliery is monitored through internal
inspections, external audits conducted by the Department of Water
and Sanitation ("DWS"), as well as audits conducted by the
Environmental Compliance Officer. Vele also participates in the
Project Steering Committee, in line with the historical October
2014 Biodiversity Off-take Agreement between the Company, the
Department of Environmental Affairs and the South African National
Parks.
Greater Soutpansberg Projects (GSP) -74% owned
GSP comprises Chupudi, Generaal, a nd Mopane coal projects and
reported no LTIs or positive COVID-19 cases during the period
(FY2021 H1: nil).
The South African Department of Mineral Resources & Energy
("DMRE") has granted mining rights for the three project areas
comprising the GSP, namely, Chapudi, Mopane and Generaal. The
granting of all three mining rights has been appealed. The
exploration and development of the three GSP areas is the catalyst
for MC Mining's long-term growth. The three GSP project areas
contain over 6.3 billion gross tonnes in situ of inferred hard
coking coal and thermal coal resources, positioning the GSP to be a
potential long-term coal supplier. The Company anticipates
commencing with the various studies required for the outstanding
water and environmental regulatory approvals once the Makhado Phase
1 funding has been secured.
Corporate
The Industrial Development Corporation of South Africa Limited
("IDC") has provided longstanding financial support for the
development of the Makhado Project and has provided a loan of $10.0
million (ZAR160 million) (the "Facility") which has funded the
progress of Makhado to its fully-permitted status and to partially
fund the acquisition of the surface rights over the project area.
This resulted in the IDC becoming a 6.7% shareholder in MC Mining
subsidiary, Baobab Mining & Exploration (Pty) Ltd, the owner of
the Makhado Project. The loan balance plus accrued interest was due
to be repaid on 31 July 2021 and during H1 FY2022, the IDC extended
the date for repayment to 31 January 2022. During January 2022,
this was further extended to 30 November 2022.
During July 2019 the IDC granted MC Mining a conditional $15.4
million (ZAR245 million) term loan facility (the "New Facility")
for the development of the Makhado Project. The New Facility is
subject to various conditions precedent including the issue of
additional equity to MC Mining shareholders for a minimum of $12.5
million (ZAR200 million) and the settlement of the existing
Facility. During the reporting period the terminal draw down date
for the New Facility was extended from 31 July 2021 to 31 January
2022 and in January 2022, the IDC further extended the terminal
draw down date for the New Facility to 30 November 2022, subject to
the bank confirming its due diligence (refer "Events after the
reporting period" below).
Financial review
The loss after tax attributable to the owners of the parent for
the six months under review was $773,579 or 0.54 cents per share
compared to a loss after tax of $2,628,000 or 1.80 cents per share
for the prior corresponding period.
The loss after tax for the period under review of $828,362
(FY2021 H1: $2,657,222) includes:
-- revenue of $13,030,159 (FY2021 H1: $$8,802,697) and cost of
sales of $10,912,725 (FY2021 H1: $9,218,508), resulting in a gross
profit of $2,117,435 (FY2021 H1: gross loss of $415,811);
-- there was no impairment recognized in the current period;
-- income tax credit of $510,083 (FY2021 H1: credit of $247,863);
-- net foreign exchange loss of $186,698 (FY2021 H1: gain of
$75,182) arising from the translation of borrowings and cash due to
movement in the ZAR:USD and ZAR:AUD exchange rates during the
period;
-- employee benefit expense of $1,201,849 (FY2021 H1: $1,043,960);
-- other expenses of $1,661,537 (FY2021 H1: $1,321,335);
-- depreciation of $45,570 (FY2021 H1: $44,250) in administrative expenses.
As at 31 December 2021, the Company had cash and cash
equivalents of $1,906,477 compared to cash and cash equivalents of
$1,023,167 at 30 June 2021.
Authorised and issued share capital
MC Mining had 154,419,555 fully paid ordinary shares in issue as
at 31 December 2021. The holders of ordinary shares are entitled to
one vote per share and are entitled to receive dividends when
declared.
Dividends
No dividends were declared by or paid by MC Mining Limited
during the six months.
Basis of preparation and going concern
The attached interim financial statements for the half-year
ended 31 December 2021 contains an independent auditor's review
report which includes an emphasis of matter paragraph with regards
to the existence of a material uncertainty that may cast
significant doubt about the Group's ability to continue as a going
concern.
The directors have prepared a cash flow forecast for the
twelve-month period ending 31 March 2023, taking into account
available facilities, additional funding that is expected to be
raised and expected cash flows to be generated by Uitkomst, which
indicates that the Group will have sufficient cash to fund their
operations for at least the twelve-month period from the date of
signing this report.
The IDC Facility (capital amount $15.3 million (ZAR160,000,000))
is now repayable on 30 November 2022 and the Company's cash flow
forecasts include the assumption that it can negotiate a deferred
settlement over time of the Facility to when Makhado Phase 1 is at
steady state production, as opposed to being payable in November
2022, with the balance being rolled into a New Facility with the
IDC. This is conditional on the Company raising further funding for
the development of Phase 1 of the Makhado project (the "Additional
Funding"). The Company is exploring and progressing a number of
alternatives to raise the Additional Funding including, but not
limited to, the issue of new equity for cash in both the Company
and its subsidiary companies which own the Makhado project, the
sale of minority stakes in the corporate entities holding the
Makhado project, further debt funding and contractor funding, such
as build, own, operate, transfer ("BOOT") arrangements.
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, as well as the potential
funder's due diligence process. As such, whilst the directors are
confident, there can be no guarantee that the required funds will
be raised. In the 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 IDC
Facility to be converted into equity.
For further information, refer to note 2 of the interim
financial statements together with the auditor's review report.
Events after the reporting period
Baobab deferred payment
Baobab completed the acquisition of the Lukin and Salaita
properties, being the key surface rights for the Makhado Project in
January 2019 for $4.4 million (ZAR70 million) and paid $2.2 million
(ZAR 35 million). The balance of the purchase price of $2.2 million
(ZAR35 million) (plus interest) (the "Deferred Payment") was
payable by Baobab within three years of the transfer of the
properties (or on the earlier of certain events occurring).
The Deferred Payment was due on 10 January 2022 and the vendor
agreed to extend the due date for payment to 28 February 2022. The
Company paid an instalment of $0.4 million (ZAR6 million) in
January 2022 and the balance of $2.3 million (ZAR34.6 million),
including accrued interest, was settled at the end of February 2022
.
IDC
The repayment date of the IDC loan balance plus accrued interest
that was due to be repaid on 31 January 2022 was extended to 30
November 2022. The IDC also agreed to extend the terminal draw down
date in respect of the conditional July 2019 ZAR245 million ($15.3
million) term loan facility (the "New Facility") for the
development of the Makhado Project, to 30 November 2022, subject to
the bank confirming it's due diligence. The New Facility remains
part of the composite Makhado Phase 1 funding package, subject to
the repayment of the Facility, along with accrued interest
thereon.
Senosi Group funding
On 1 February 2022 MC Mining entered into a staged $5.6 million
(ZAR86.0 million) Convertible Advance and Subscription Agreement
(the "Senosi Agreement") with South African based mining group,
Senosi Group Investment Holdings Proprietary Limited ("SGIH"). In
terms of the Senosi Agreement:
-- the initial share subscription by SGIH is limited to
38,363,909 new ordinary MC Mining shares (the "First Tranche
Shares") to be issued at ZAR1.20 ($0.08) per share (the "Issue
Price") raising ZAR46.0 million (the "First Tranche Funding") and
subject to regulatory approvals, will result in SGIH owning 19.9%
of the Company's issued shares. The Issue Price equated to a 7.1%
premium to the Company's closing price as quoted on the JSE on
Monday 31 January 2022.
-- SGIH also conditionally agreed to subscribe for a second
tranche of 33,333,333 new ordinary MC Mining shares (the "Second
Tranche Shares") (together with the First Tranche Shares, the
"Placement Shares") at the Issue Price, raising the balance of
ZAR40 million (the "Second Tranche Funding"). This placement is
subject to the receipt of all required approvals and will result in
SGIH holding 31.71% of MC Mining (assuming no further shares are
issued in the interim).
The issue of the Placement Shares is subject to certain
customary approvals by the ASX and JSE, and is also 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 result in SGIH's interest in MCM
exceeding 20% and will require the prior approval of shareholders
at a General Meeting. The Notice of Meeting of shareholders 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.
In the interim, SGIH 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 five 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.
The timing and amount of loan funds to be provided by SGIH is as
set out below:
First Tranche Funding:
Date ZAR
First week of February 2022 10,000,000
-----------
23 February 2022 30,000,000
-----------
31 March 2022 6,036,691
-----------
Total 46,036,691
-----------
The First Tranche Funding is secured against shares in MC
Mining's wholly owned subsidiaries, Limpopo Coal Company (Pty) Ltd
and Harrisia 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 million ($2.7 million) 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.
Notice Received Under Section 249D of the Corporations Act
On 11 February 2022 MC Mining received a notice under section
249D of the Corporations Act 2001 (Cth) (the "Notice"), from
shareholders who hold approximately 6.8% of the Company's ordinary
shares between them, requisitioning that a general meeting of the
Company be held. The request for a meeting was made for
shareholders to consider the following resolutions at a general
meeting:
-- the removal of Mr Bernard Pryor as a director of the Company;
-- the removal of Mr Sebastiano Randazzo as a director of the Company;
-- the removal of any other director of the Company appointed after the date of the Notice;
-- the appointment of Mr Nhlanhla Nene as a director of the Company; and
-- the appointment of Mr Godfrey Gomwe as a director of the Company.
A general meeting of shareholders has been convened for 11 April
2022 and the related notice of meeting was dispatched to
shareholders on 4 March 2022. The notice of meeting is available
for viewing on the Company's website.
Resignation of Non-Executive Chairman
On 11 March 2022, Mr Bernard Pryor resigned as Chairman of the
Board and long standing Non-Executive director Mr Khomotso Mosehla
was appointed as Chairman pending the outcome of the shareholder
requisitioned meeting scheduled for 11 April 2022.
Rounding off of amounts
The Company is of the kind referred to in ASIC Legislative
Instrument 2016/191, and in accordance with that Instrument amounts
in the directors' report and the half-year financial report are
rounded off to the nearest thousand dollars, unless otherwise
indicated.
Auditor's Independence Declaration
The auditor's independence declaration is included on page 28 of
the half-year report.
The half-year report set out on pages 9 to 26, which has been
prepared on a going concern basis, was approved by the board on 11
March 2022 and was signed on its behalf by:
________________________________
________________________________
Khomotso Mosehla Sebastiano (Sam) Randazzo
Chairman Chief Executive Officer
11 March 2022 11 March 2022
Dated at Johannesburg, South Africa, this 11(th) day of March
2022.
MC MINING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF-YEARED 31 DECEMBER 2021
Six months Six months
ended ended
31 Dec 2021 31 Dec 2020
Note $'000 $'000
--------------------------------------------- ----- ------------- -------------
Continuing operations
Revenue 4 13,030 8,803
Cost of sales 5 (10,913) (9,219)
------------- -------------
Gross (loss)/profit 2,117 (416)
Other operating income 6 42 116
Other operating gains 7 188 292
Impairment reversal/(expense) 8 - 163
Administrative expenses 9 (2,909) (2,409)
Operating loss (562) (2,254)
Interest income 73 83
Finance costs (850) (734)
------------- -------------
Loss before tax (1,339) (2,905)
Income tax credit 10 510 248
------------- -------------
LOSS AFTER TAX (829) (2,657)
Other comprehensive profit/(loss),
net of income tax
Items that may be reclassified subsequently
to profit or loss
Exchange differences on translating
foreign operations (9,817) 17,146
------------- -------------
Total comprehensive profit/(loss)
for the period (10,646) 14,489
------------- -------------
Loss after tax for the period attributable
to:
Owners of the parent (774) (2,628)
Non-controlling interests (55) (29)
------------- -------------
(829) (2,657)
------------- -------------
Total comprehensive profit/(loss)
attributable to:
Owners of the parent (10,591) 14,518
Non-controlling interests (55) (29)
------------- -------------
(10,646) 14,489
------------- -------------
Loss per share
Basic and diluted (cents per share) 12 (0.54) (1.80)
The accompanying notes are an integral part of these
condensed consolidated financial statements
MC MINING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2021
31 Dec 2021 30 June
2021
Note $'000 $'000
------------------------------------- ----- ------------ ----------
ASSETS
Non-current assets
Exploration and evaluation assets 13 84,844 93,467
Development assets 13 17,260 19,055
Property, plant and equipment 24,194 27,370
Right-of-use assets 14 2,968 2,588
Other financial assets 4,624 4,708
Restricted cash 15 159 95
Total non-current assets 134,049 147,283
------------ ----------
Current assets
Inventories 1,428 834
Trade and other receivables 992 3,430
Tax receivable - 4
Cash and cash equivalents 15 1,986 3,226
------------ ----------
Total current assets 4,406 7,494
Total assets 138,455 154,777
------------ ----------
LIABILITIES
Non-current liabilities
Borrowings 18 - 251
Provisions 6,459 6,689
Deferred tax liability 3,743 4,669
Lease liabilities 16 2,534 1,557
Total non-current liabilities 12,736 13,166
------------ ----------
Current liabilities
Current deferred consideration 17 2,560 2,796
Current borrowings 18 17,462 19,231
Trade and other payables 7,410 9,394
Contract liability 19 1,307 -
Bank overdraft 15 80 2,203
Current provisions 143 195
Current tax liabilities 371 413
Current lease liabilities 16 231 855
Total current liabilities 29,564 35,087
Total liabilities 42,300 48,253
------------ ----------
NET ASSETS 96,155 106,524
------------ ----------
EQUITY
Issued capital 20 1,041,884 1,041,884
Accumulated deficit (907,607) (907,202)
Reserves (37,346) (27,437)
------------ ----------
Equity attributable to owners of
the parent 96,931 107,245
Non-controlling interests (776) (721)
------------ ----------
TOTAL EQUITY 96,155 106,524
------------ ----------
The accompanying notes are an integral part of these condensed
consolidated financial statements
MC MINING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEARED 31 DECEMBER 2021
Issued Accumulated Share Capital Warrants Foreign Attributable Non-controlling Total
capital deficit based profits reserve currency to owners interests equity
payment reserve translation of the
reserve reserve parent
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- ---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 1
July 2021 1,041,884 (907,202) 1,494 91 1,177 (30,199) 107,245 (721) 106,524
Total
comprehensive
profit/(loss)
for the
period - (774) - - - (9,817) (10,591) (55) (10,646)
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Loss for the
period -
continuing
operations - (774) - - - - (774) (55) (829)
Other
comprehensive
loss,
net of tax - - - - - (9,817) (9,817) - (9,817)
Share based
payments - - 277 - - - 277 - 277
Performance
rights
expired - 369 (369) - - - - - -
Performance - - - - - - - -
rights
forfeited
Shares issued - - - - - - - - -
Share issue - - - - - - - - -
costs
Warrants - - - - - - - - -
issued
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 31
December
2021 1,041,884 (907,607) 1,402 91 1,177 (40,016) 96,931 (776) 96,155
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Balance at 1
July 2020 1,041,080 (895,591) 1,460 91 1,134 (48,603) 99,571 (628) 98,943
Total
comprehensive
profit/(loss)
for the
period - (2,628) - - - 17,146 14,518 (29) 14,489
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Loss for the
period -
continuing
operations - (2,628) - - - - (2,628) (29) (2,657)
Other
comprehensive
loss,
net of tax - - - - - 17,146 17,146 - 17,146
---------- ------------ -------- -------- --------- ------------ ------------- ---------------- ---------
Share based
payments - - 267 - - - 267 - 267
Performance
rights
expired - 88 (88) - - - - - -
Performance
rights
forfeited - (272) - - - (272) - (272)
Shares issued 869 - - - - - 869 - 869
Share issue
costs (65) - - - - - (65) - (65)
Warrants
issued - - - - 44 - 44 - 44
Balance at 31
December
2020 1,041,884 (898,131) 1,367 91 1,178 (31,457) 114,932 (657) 114,275
The accompanying notes are an integral part of these
condensed
consolidated financial statements
MC MINING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF-YEARED 31 DECEMBER 2021
Six months Six months
ended ended
31 Dec 2021 31 Dec 2020
Note $'000 $'000
------------------------------------------------------------- ----- ------------- -------------
Cash Flows from Operating Activities
Receipts from customers 17,798 7,930
Payments to employees and suppliers (15,179) (11,149)
------------- -------------
Cash generated/(used) in operatio ns 2,619 (3,219)
Interest received 16 83
Interest paid (129) (98)
Tax refund 45 173
Net cash generated/(used) in operating activities 2,551 (3,061)
------------- -------------
Cash Flows from Investing Activities
Purchase of property, plant and equipment (567) (128)
Proceeds on disposal of property, plant and equipment - 463
Investment in exploration and evaluation assets 13 (30) (33)
(Increase)/decrease in other financial assets (101) (303)
Khethekile acquisition - deferred consideration payment 17 - (111)
Payments for development assets 13 (3) (2)
-------------
Net cash used in investing activities (701) (114)
------------- -------------
Cash Flows from Financing Activities
Lease repayments 16 (424) (451)
Borrowings repayments 18 (351) (197)
Loans advanced - IDC - 2,370
Shares issued net of share issue costs - 804
Debt issuance costs - (27)
Transfer to restricted cash - (24)
-------------
Net cash generated/(used) in financing activities (775) 2,475
------------- -------------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,075 (700)
Cash and cash equivalents at the beginning of the half-year 1,023 464
Foreign exchange differences (192) 240
------------- -------------
Cash and cash equivalents at the end of the half-year 15 1,906 4
------------- -------------
The accompanying notes are an integral part of these condensed
consolidated financial statements
MC MINING LIMITED
NOTES TO THE CONDENSED CONSOLIDATED HALF-YEAR REPORT
FOR THE HALF-YEARED 31 DECEMBER 2021
1. Significant Accounting Policies
Statement of compliance
The half-year financial report is a general purpose financial
report prepared in accordance with the Corporations Act 2001 and
AASB 134: 'Interim Financial Reporting'. Compliance with AASB 134
ensures compliance with International Financial Reporting Standard
IAS 34 'Interim Financial Reporting'. The half-year report does not
include notes of the type normally included in an annual financial
report and should be read in conjunction with the most recent
annual financial report.
Basis of preparation
The condensed consolidated financial statements have been
prepared on the basis of historical cost, except for the
revaluation of financial instruments and assets held for sale. Cost
is based on the fair values of the consideration given in exchange
for assets.
All amounts are presented in United States dollars, unless
otherwise noted.
The company is of a kind referred to in ASIC Legislative
Instrument 2016/191, relating to the 'rounding off' of amounts in
the financial statement. Amounts in the directors' report and the
half-year financial report have been rounded off in accordance with
the instrument to the nearest thousand dollars, or in certain
cases, to the nearest dollar.
The accounting policies and methods of computation adopted in
the preparation of the half-year financial report are consistent
with those adopted and disclosed in the company's 2021 annual
financial report for the financial year ended 30 June 2021, except
for the impact of the Standards and Interpretations described
below. These accounting policies are consistent with the Australian
Accounting Standards and with International Financial Reporting
Standards ("IFRS").
Where applicable, certain comparatives have been adjusted to
conform with current year presentation.
The Group has adopted all of the new and revised Standards and
Interpretations issued by the Australian Accounting Standards Board
("the AASB") that are relevant to their operations and effective
for the current reporting period.
2. Going Concern
The Consolidated Entity has incurred a net loss after tax for
the six months ended 31 December 2021 of $0.8 million (31 December
2020: loss of $2.7 million). During the six months ended 31
December 2021, net cash inflows from operating activities were $2.5
million (31 December 2020 net outflow: $3.1 million). As at 31
December 2021, the Consolidated Entity had a net current liability
position of $25.2 million (31 December 2020: net current liability
position of $27.6 million).
After the end of the reporting period, the repayment date of the
$10.0 million (ZAR160 million) IDC loan facility was extended from
31 January 2022 to 30 November 2022. The IDC also agreed to extend
the terminal drawdown date in respect of the conditional $15.4
million (ZAR245 million) term loan agreed to partially finance the
development of Phase 1 of the Makhado Project, also from 31 January
2022 to 30 November 2022, subject to the IDC reaffirming its due
diligence.
The directors have prepared a cash flow forecast for the
twelve-month period ended 31 March 2023, taking into account
available facilities, equity funding already concluded, additional
equity and debt funding that although not yet concluded, is
expected to be raised and, expected cash flows to be generated by
Uitkomst. On the basis of these equity and debt funding initiatives
being successfully implemented, the Group will have sufficient cash
to fund their operations for at least the twelve-month period from
the date of signing this report.
These cash flow forecasts referred to above include the
following assumptions:
-- Meeting commitments to creditors arising from continuing operations;
-- Deferring the settlement of the existing ZAR160 million IDC
facility (plus accrued interest) to when Makhado Phase 1 is at
steady state production as opposed to being payable in November
2022 (refer note 18) and/or converting this facility to equity;
-- A drawdown of the new term loan facility of $15.4 million (ZAR245 million);
-- Contractor funding including a build, own, operate, transfer
("BOOT") arrangement of $3.8 million thousand (ZAR60 million);
-- The issue of new equity for cash in the Company to current and new shareholders; and
-- In addition to the $15.4 million (ZAR245 million) new IDC
term loan facility and $3.8 million (ZAR60 million) BOOT
arrangement referred to above, securing additional funding of
approximately $29.1 million (ZAR464 million) required ("Additional
Funding") to finance the development of Phase 1 of the Makhado
Project, through either a debt or equity raise or a combination
thereof.
The Group is in negotiations with the IDC on the deferral of the
repayment of the existing ZAR160 million facility, which may have
an impact on its ability to draw down on the ZAR245 million new
term loan facility. This is due to this facility being subject to
certain conditions precedent which are still to be met, one of
which is the settlement of the ZAR160 million facility. In
addition, draw down on the conditional $15.4 million (ZAR245
million) new term loan facility is subject to the IDC reaffirming
its due diligence for the Makhado project.
The Group is exploring and progressing several alternatives to
raise the 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;
-- 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 conclusion of the debt and equity funding initiatives
included in the cash flow forecast and for purposes of obtaining
the additional funding as outlined above, and negotiations with the
IDC on current and further funding, is by its nature an involved
process subject to successful negotiations with the external
funders and shareholders. In addition, any equity raise is likely
to be subject to a due diligence process.
These conditions create a material uncertainty that may cast
significant doubt on the entity's ability to continue as a going
concern and, therefore, the Group may be unable to realize its
assets and discharge its liabilities in the normal course of
business and the amounts stated in the financial statements
The Directors are of the opinion that the going concern basis
remains appropriate as a result of the following
considerations:
-- During February 2022 the Group secured funding of $5.4
million (ZAR86 million) in equity funding from South African based
mining group, the Senosi Group Investment Holdings Proprietary
Limited ("SGIH"). The funds will be received between February and
July 2022 with the issue of MC Mining equity subject to South
African Reserve Bank approval, while $2.5 million (ZAR40 million)
of the funding also requires approval from the Company's
shareholders;
-- The Group is already in discussions with the IDC on the
deferral of the settlement of the existing ZAR160 million facility
and the restructuring of the conditions precedent in relation to
the new term loan facility;
-- The Group has a history of successful capital raisings to
meet the Group's funding requirements; and
-- The Group has the capacity if necessary to reduce its
operating cost structure in order to minimise its working capital
requirements.
Subject to raising the required funding noted above, the
development of Phase 1 of the Makhado Project will subsequently
commence within the twelve months following the signing of this
financial report.
Based on the above, the directors are satisfied at the date of
signing this consolidated half-year report that there are
reasonable grounds to believe that they will be successful in
obtaining the required funding and that the Group will have
sufficient funds to meet its obligations as and when they fall due
and are of the opinion that the use of the going concern basis
remains appropriate.
This consolidated financial report does not give effect to
adjustments that would be necessary to the carrying value and
classification of assets and liabilities, should the Group be
unable to continue as a going concern. Such adjustments could be
material.
3. Segment Information
AASB 8 requires operating segments to be identified on the basis
of internal reports about components of the Group that are
regularly reviewed by the chief operating decision maker in order
to allocate resources to the segment and to assess its
performance.
Information reported to the Group's Chief Executive Officer
("CEO") for the purposes of resource allocation and assessment of
performance is more specifically focused on the stage within the
mining pipeline that the operation finds itself in.
The Group's reportable segments under AASB 8 are therefore as
follows:
-- Exploration
-- Development
-- Mining
The Exploration segment is involved in the search for resources
suitable for commercial exploitation, and the determination of the
technical feasibility and commercial viability of resources. As of
31 December 2021, projects within this reportable segment include
four exploration stage coking and thermal coal complexes, namely
the Chapudi Complex (which comprises the Chapudi project, the
Chapudi West project and the Wildebeesthoek project), Generaal
(which comprises the Generaal Project and the Mount Stuart
Project), Mopane (which comprises the Voorburg Project and the
Jutland Project) and Makhado Project.
The Development segment is engaged in establishing access to and
commissioning facilities to extract, treat and transport production
from the mineral reserve, and other preparations for commercial
production. As at 31 December 2021, projects included within this
reportable segment includes the Vele Colliery, in the early
operational and development stage but currently on care and
maintenance and Klipspruit which is included in the Uitkomst
Colliery.
The Mining segment is involved in day to day activities of
obtaining a saleable product from the mineral reserve on a
commercial scale and consists of Uitkomst Colliery.
The Group evaluates performance on the basis of segment
profitability, which represents net operating (loss) / profit
earned by each reportable segment.
Each reportable segment is managed separately because, amongst
other things, each reportable segment has substantially different
risks.
The Group accounts for intersegment sales and transfers as if
the sales or transfers were to third parties, i.e. at current
market prices.
The Group's reportable segments focus on the stage of project
development and the product offerings of coal mines in
production.
The following is an analysis of the Group's results by
reportable operating segment for the period under review:
For the six months ended 31 December 2021
$'000 $'000 $'000 $'000
-------------------------------- ------------
Exploration Development Mining Total
------------ ------------ ---------
Revenue - - 13,030 13,030
Cost of sales - - (10,913) (10,913)
------------ ------------ ---------
Gross Profit - - 2,117 2,117
Other operating income 2 22 14 38
Other operating gains/(losses) - - 62 62
Administrative expenses (533) (333) (85) (951)
Profit and loss before
interest (531) (311) 2,108 1,266
Interest income 5 - 15 20
Finance costs (360) (203) (288) (850)
------------ ------------ ---------
Profit before tax (886) (514) 1,835 435
------------ ------------ ---------
For the six months ended 31 December 2020
$'000 $'000 $'000 $'000
-------------------------------- ------------
Exploration Development Mining Total
------------ ------------ --------
Revenue - - 8,803 8,803
Cost of sales - - (9,219) (9,219)
------------ ------------ --------
Gross Profit - - (416) (416)
Other operating income 20 39 42 101
Other operating gains/(losses) (8) - 46 38
Administrative expenses (258) (296) (128) (682)
Profit and loss before
interest (246) (257) (456) (959)
Interest income 20 - 8 28
Finance costs (296) (175) (262) (733)
------------ ------------ --------
Loss before tax (522) (432) (710) (1,664)
------------ ------------ --------
The following is an analysis of the Group's assets by reportable
operating segment:
31 Dec 30 June
2021 2021
$'000 $'000
-------- --------
Exploration 89,758 86,031
Development 17,408 31,337
Mining 25,101 31,458
-------- --------
Total segment assets 132,267 148,786
-------- --------
Reconciliation of segment information to the consolidated
financial statements:
31 Dec 2021 31 Dec
2020
$'000 $'000
------------ --------
Total profit/(loss) for reportable segments 435 (1,664)
Other operating gains/(losses) 126 417
Administrative expenses (1,957) (1,727)
Other operating income 5 15
Impairment reversal - -
Interest income 52 55
Finance costs - (1)
------------ --------
Loss before tax (1,339) (2,905)
------------ --------
31 Dec 2021 30 June
2021
$'000 $'000
------------ ----------
Total segment assets 132,267 148,786
Unallocated property, plant and equipment 208 1,201
Other financial assets 4,326 4,469
Unallocated current assets 1,654 321
Total assets 138,455 154,777
------------ ----------
The reconciling items relate to corporate assets.
4. Revenue
Revenue consists of the sale of coal by the Uitkomst Colliery.
All coal sales during the period were made to customers in South
Africa, mainly in the steel industry.
5. Cost of sales
Cost of sales consists of:
31 Dec
2021 31 Dec 2020
$'000 $'000
--------- ------------
Salaries and wages (4,537) (3,574)
Underground mining (2,048) (1,487)
Depreciation and amortisation (1,245) (1,205)
Logistics (52) (189)
Other direct mining costs (3,447) (2,733)
Inventory adjustment 498 35
Other (82) (66)
--------- ------------
(10,913) (9,219)
--------- ------------
6. Other operating income
Other operating income includes:
31 Dec 2021 31 Dec 2020
$'000 $'000
------------ ------------
Rental income - 3
Other 42 113
------------ ------------
42 116
------------ ------------
7. Other operating gains
Other operating gains or losses include:
31 Dec 2021 31 Dec 2020
$'000 $'000
------------ ------------
Foreign exchange (loss)/profit
Unrealised (170) 133
Realised (16) (58)
Other 374 217
------------ ------------
188 292
------------ ------------
8. Impairment reversal
Although management identified the discount between the market
capitalisation and the net asset value at 31 December 2021, it
should also be noted that this discount has existed for several
historical reporting periods and therefore is not a sole indicator
of impairment. The key financial assumptions used in the June 2021
impairment calculations have shown subsequent favourable movements,
with hard coking coal and thermal prices increasing significantly.
As a result, n o impairment at 31 December 2021 was deemed
necessary.
The impairment reversal recognised comprises:
31 Dec 2021 31 Dec 2020
$'000 $'000
------------- ------------
Harrisia Investment Holdings (Pty) Ltd properties
sold 1 - 163
- 163
------------------------------------------------------------------ ------------
1 - Impairment reversals for assets previously impaired.
9. Administrative expenses
31 Dec
2021 31 Dec 2020
$'000 $'000
-------- ------------
Employee costs (1,201) (1,044)
Depreciation and amortisation (46) (44)
Other (1,662) (1,321)
-------- ------------
(2,909) (2,409)
-------- ------------
10. Income tax credit
The tax credit relates to the following:
31 Dec
2021 31 Dec 2020
$'000 $'000
------- ------------
Current income tax expense 45 -
Deferred tax current year 465 248
510 248
------- ------------
11. Dividends
No dividend has been paid by MC Mining Limited or is proposed in
respect of the half-year ended 31 December 2021 (FY 2021 H1:
nil)
12. Loss per share
31 Dec 2021 31 Dec
2020
------------ ----------
12.1 Basic loss per share
Cents per Cents per
share share
------------ ----------
Basic loss per share
From continuing operations (0.54) (1.80)
$'000 $'000
------------ ----------
Loss for the period attributable to owners of
the parent (774) (2,628)
31 Dec 2021 31 Dec
2020
------------ ------------
'000 shares '000 shares
------------ ------------
Weighted number of ordinary shares
Weighted average number of ordinary shares for
the purposes of basic loss per share 154,420 146,019
------------ ------------
12.2 Diluted loss per share
Diluted loss per share is calculated by dividing the loss
attributable to owners of the Company by the weighted average
number of ordinary shares outstanding during the year plus the
weighted average number of dilutive ordinary share that would be
issued on conversion of all the dilutive potential ordinary shares
into ordinary shares.
As the Company is in a loss position, the diluted potential
ordinary shares impact is anti-dilutive.
12.3 Headline loss per share (in line with JSE listing requirements)
The calculation of headline loss per share at 31 December 2021
was based on the headline loss attributable to ordinary equity
holders of the Company of $773,579 ( FY 2021 H1 : $2,627,885) and a
weighted average number of ordinary shares outstanding during the
period ended 31 December 2021 of 154,419,555 ( FY 2021 H1 :
146,018,926).
The adjustments made to arrive at the headline loss are as
follows:
31 Dec
31 Dec 2021 2020
$'000 $'000
------------ --------
Loss after tax for the period attributable
to ordinary shareholders (774) (2,628)
Adjust for:
Impairment - (163)
Headline loss (774) (2,791)
------------ --------
Headline loss per share (cents per share) (0.54) (1.91)
13. Development, Exploration and Evaluation Assets
A reconciliation of development, exploration and evaluation
assets is presented below:
Exploration and evaluation assets
31 Dec 2021 30 June
$'000 2021 $'000
------------ ------------
Balance at beginning of period 93,468 78,714
Additions 30 451
Movement in rehabilitation asset 14 17
Foreign exchange differences (8,668) 14,286
------------ ------------
Balance at end of period 84,844 93,468
------------ ------------
Development assets
31 Dec 2021 30 June
2021 $'000
$'000
------------ ------------
Balance at beginning of period 19,055 20,720
Additions 3 4
Disposals - (466)
Movement in rehabilitation asset 170 36
Reversal of impairment - 158
Impairment - (6,497)
Foreign exchange differences (1,968) 5,100
------------ ------------
Balance at end of period 17,260 19,055
------------ ------------
The reversal of impairment in the prior period relates to the
sale of land that had previously been impaired.
As of 31 December 2021, the net book value of the following
project assets were included in exploration and evaluation
assets:
-- Baobab: $30,684,050
-- GSP: $53,852,683
-- Uitkomst: $307,940
As of 31 December 2021, the net book value of the following
project assets were included in development assets:
-- Vele Colliery: $17,259,365
Management have identified the discount between the market
capitalisation and the net asset value at 31 December 2021 as an
indicator that the assets may be impaired. Accordingly, management
have performed an impairment assessment at 31 December 2021. No
impairment was necessary (refer to note 8 for details).
14. Right-of-use assets
The Group leases various assets including land, buildings, plant
and machinery and vehicles. The movement in the right-of-use assets
is as follows:
31 Dec 30 June
2021 2021
$'000 $'000
-------- --------
Balance at beginning of the period 2,588 1,819
Additions 67 95
Depreciation (326) (660)
Modification 945 922
Foreign exchange differences (306) 412
-------- --------
Balance at end of period 2,968 2,588
-------- --------
15. Cash and cash equivalents
31 Dec 30 June
2021 2021
$'000 $'000
-------- --------
Bank balances 1,986 3,226
Bank overdraft (80) (2,203)
1,906 1,023
-------- --------
Restricted cash 159 95
159 95
-------- --------
The bank overdraft relates to an ABSA Bank Limited ("ABSA")
facility for $1.3 million (ZAR20 million). The facility is for
short-term working capital requirements and potential expansion
opportunities. It has a floating coupon at the South African Prime
rate (currently 7.5% per annum) plus 1.0%, with the operating mine,
Uitkomst Colliery, debtors ceded as security. The facility is
subject to annual review. The facility was increased by an
additional $1.3 million (ZAR20 million) in May 2020 to alleviate
the financial challenges during the COVID-19 period. Repayment of
the additional facility in equal monthly instalments commenced
during FY2021 with the final instalment paid in January 2022. The
same interest rate applies to the additional facility and a general
notarial bond against Uitkomst Colliery assets was registered in
terms of the additional facility amount.
16. Lease liabilities
The movement in the lease liabilities is as follows:
30 June
31 Dec 2021 2021
$'000 $'000
------------- -----------------
Balance at beginning of the period 2,412 1,835
Modification 923 858
Additions - 102
Interest 131 202
Repayments (424) (1,038)
Foreign exchange differences (277) 453
------------- -----------------
Balance at end of period 2,765 2,412
------------- -----------------
The maturity of the Group's undiscounted lease payments is as
follows:
30 June
31 Dec 2021 2021
$'000 $'000
------------- --------
Not later than one year 839 855
Later than one year and not later than five
years 2,268 2,068
Later than five years 371 113
------------- --------
3,478 3,036
Less future finance charges (713) (624)
------------- --------
Present value of minimum lease payments 2,765 2,412
------------- --------
17. Deferred consideration
30 June
31 Dec 2021 2021
$'000 $'000
------------- --------
Opening balance 2,796 2,321
Interest accrued 54 103
Repayments - (117)
Foreign exchange differences (290) 489
------------- --------
2,560 2,796
------------- --------
17. Deferred consideration (continued)
Lukin and Salaita deferred consideration
In the 2019 financial year, the Company's subsidiary, Baobab,
completed the acquisition of the properties Lukin and Salaita, the
key surface rights required for its Makhado Project for an
acquisition price of $4.4 million (ZAR70 million). $2.2 million
(ZAR35 million) of the acquisition price has been deferred to the
earlier of:
-- the third anniversary of the transfer of the properties; or
-- the first anniversary of production of coal underlying the properties; or
-- completion of a potential land claims and expropriation
process. In terms of current legislation, this will result in
Baobab receiving market related compensation and will be followed
by negotiations with the Minister of Land Affairs and the
successful claimants, who are shareholders in Baobab, for long-term
access to the properties.
The deferred consideration accrues interest at the South African
prime interest rate (7.25% at the end of December 2021) less
3.0%.
Refer Note 22 (events subsequent to reporting date) for
additional detail on the Lukin and Salaita deferred
consideration.
18. Borrowings
30 June
31 Dec 2021 2021
$'000 $'000
------------- --------
Opening balance 19,482 13,595
Loan advanced
- IDC - 2,347
Loan cost capitalised
- Warrants capitalised - (43)
Interest accrued 331 617
Repayments
- PARMS* (351) (340)
Foreign exchange differences (2,000) 3,306
------------- --------
17,462 19,482
------------- --------
Non-current - 251
Current 17,462 19,231
------- -------
17,462 19,482
------- -------
* - Pan African Resources Management Services (Pty) Ltd
("PARMS")
Industrial Development Corporation of South Africa Limited
The IDC has provided longstanding financial support for the
development of the Makhado Project and in March 2017 granted MC
Mining a facility of which ZAR160 million ($10.0 million) was drawn
to progress Makhado to its fully-permitted status and to partially
fund the acquisition of the surface rights over the project area.
This resulted in IDC becoming a 6.7% shareholder in MC Mining
subsidiary, Baobab, the owner of the Makhado Project. The loan
balance plus accrued interest was due to be repaid on 31 July 2021
and during H1 FY2022, the IDC extended the date for repayment to 31
January 2022. Subsequent to the end of H1 FY2022, the IDC extended
the repayment date for the ZAR160 million (plus accrued interest)
to 30 November 2022.
The IDC also agreed to extend the terminal draw down date in
respect of the conditional July 2019 ZAR245 million ($15.4 million)
n ew facility for the development of the Makhado Project, to 30
November 2022, subject to the bank confirming its due diligence.
The ZAR245 million new facility remains part of the composite
Makhado Phase 1 funding package, subject to the repayment of the
March 2017 facility, along with accrued interest thereon.
18. Borrowings (continued)
MC Mining is required to issue warrants, in respect of MC Mining
shares, to the IDC on the draw down of the March 2017 facility. The
warrants for the first $0.8 million (ZAR120 million) draw down
equated to 2.5% (equating to 2,408,752 shares) of the entire issued
share capital of MC Mining as at 5 December 2016. The price at
which the IDC shall be entitled to purchase the MC Mining shares is
equal to a thirty percent premium to the 30-day volume weighted
average price of the MC Mining shares as traded on the JSE as at 5
December 2016 (ZAR0.60 per share (ZAR12.00 after the premium
and
the 20:1 share consolidation in December 2017)). The IDC is
entitled to exercise the warrants for a period of five years from
the date of issue and these warrants expire on or before 16 June
2022. The warrants for the second draw down equated to 0.833%
(equating to 1,286,315 shares) of the entire share capital of MC
Mining as at 1 October 2020.
Furthermore, upon each advance, Baobab is required to issue new
ordinary shares in Baobab to the IDC equivalent to 5% of the entire
issued share capital of Baobab at such time. As a result of the
first draw down, 5% of Baobab's equity was issued to the IDC on the
initial drawdown of ZAR120 million and Baobab is required to issue
additional ordinary shares to the IDC equivalent to 1.7% of the
entire share capital of Baobab for the $2.5 million (ZAR40 million)
draw down in July 2020.
PARMS
As part of the acquisition of the underground mining equipment
and liabilities of Khethekile, the Group assumed a loan of
$1,400,989 (ZAR20,539,345) from PARMS. The loan bears interest at
the South African Prime rate and is compounded monthly. It is
repayable in 48 monthly instalments of approximately $47,266
(ZAR753,885) per month which commenced in January 2019.
19. Contract Liability
The Uitkomst Colliery secured a prepayment facility of ZAR29.7
million ($2.1 million) from its largest customer. The prepayment
commenced in September 2021 and is for 16,500t of coal to be
delivered at the rate of 2,750t per month. As at the end of
December 2021, Uitkomst had supplied 8,250t in terms of the
prepayment contract and the remaining balance of $1.3 million will
be supplied equally during the three months ending March 2022.
20. Issued Capital
During the reporting period the Company issued no new ordinary
shares.
31 Dec 2021 30 June
2021
$'000 $'000
------------ ----------
154,419,555 (FY2021: 154,419,555) fully paid
ordinary shares 1,041,884 1,041,884
------------ ----------
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
Options
There were no options outstanding at 31 December 2021.
Performance Rights
On 14 December 2021 10,297,103 performance rights were
authorised by shareholders for issue to MC Mining directors. During
November 2021 1,169,619 performance rights expired.
21. Contingencies and Commitments
Contingent liabilities
The Group has no significant contingent liabilities at reporting
date.
Commitments
In addition to the commitments of the parent entity, subsidiary
companies have typical financial commitments associated with their
mining rights granted by the DMRE.
22 . Events subsequent to reporting date
Baobab deferred payment
Baobab completed the acquisition of the Lukin and Salaita
properties, being the key surface rights for the Makhado Project in
January 2019 for $4.4 million (ZAR70 million) and paid $2.2 million
(ZAR 35 million). The balance of the purchase price of $2.2 million
(ZAR35 million) (plus interest) (the "Deferred Payment") was
payable by Baobab within three years of the transfer of the
properties (or on the earlier of certain events occurring).
The Deferred Payment was due on 10 January 2022 and the vendor
agreed to extend the due date for payment to 28 February 2022. The
Company paid an instalment of $0.4 million (ZAR6 million) in
January 2022 and the balance of $2.3 million (ZAR34.6 million),
including accrued interest, was settled at the end of February 2022
.
IDC
The IDC loan of ZAR160 million ($10.0 million) plus accrued
interest was due to be repaid on 31 January 2022 and in January
2022, the IDC extended the date for repayment to 30 November 2022.
The IDC also agreed to extend the terminal draw down date in
respect of the conditional July 2019 ZAR245 million ($15.4 million)
new term loan facility for the development of the Makhado Project,
to 30 November 2022, subject to the bank confirming its due
diligence. The new term loan facility remains part of the composite
Makhado Phase 1 funding package, subject to the repayment of the
existing ZAR160 million facility, along with accrued interest
thereon.
Senosi Group funding
On 1 February 2022 MC Mining entered into a staged $5.4 million
(ZAR86.0 million) Convertible Advance and Subscription Agreement
(the "Senosi Agreement") with South African based mining group,
"SGIH". In terms of the Senosi Agreement:
-- the initial share subscription by SGIH is limited to
38,363,909 new ordinary MC Mining shares (the "First Tranche
Shares") to be issued at ZAR1.20 ($0.08) per share (the "Issue
Price") raising $2.9 million (ZAR46.0 million) (the "First Tranche
Funding") and subject to regulatory approvals, will result in SGIH
owning 19.9% of the Company's issued shares. The Issue Price
equated to a 7.1% premium to the Company's closing price as quoted
on the JSE on Monday 31 January 2022.
-- SGIH also conditionally agreed to subscribe for a second
tranche of 33,333,333 new ordinary MC Mining shares (the "Second
Tranche Shares") (together with the First Tranche Shares, the
"Placement Shares") at the Issue Price, raising the balance of $2.5
million (ZAR40 million) (the "Second Tranche Funding"). This
placement is subject to the receipt of all required approvals and
will result in SGIH holding 31.71% of MC Mining (assuming no
further shares are issued in the interim).
The issue of the Placement Shares is subject to certain
customary approvals by the ASX and JSE, and is also 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 result in SGIH's interest in MCM
exceeding 20% and will require the prior approval of Company's
shareholders at a General Meeting to exceed this level. The Notice
of Meeting of shareholders 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.
In the interim, SGIH 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 five 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.
22. Events subsequent to reporting date (continued)
The timing and amount of loan funds to be provided by SGIH is as
set out below:
First Tranche Funding:
Date ZAR
First week of February 2022 10,000,000
-----------
23 February 2022 30,000,000
-----------
31 March 2022 6,036,691
-----------
Total 46,036,691
-----------
The First Tranche Funding is secured against shares in MC
Mining'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 million ($2.7 million) 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.
Notice Received Under Section 249D of the Corporations Act
On 11 February 2022 MC Mining received a notice under section
249D of the Corporations Act 2001 (Cth) (the "Notice"), from
shareholders who hold approximately 6.8% of the Company's ordinary
shares between them, requisitioning that a general meeting of the
Company be held. The request for a meeting was made for
shareholders to consider the following resolutions at a general
meeting:
-- the removal of Mr Bernard Pryor as a director of the Company;
-- the removal of Mr Sebastiano Randazzo as a director of the Company;
-- the removal of any other director of the Company appointed after the date of the Notice;
-- the appointment of Mr Nhlanhla Nene as a director of the Company; and
-- the appointment of Mr Godfrey Gomwe as a director of the Company.
A general meeting of shareholders has been convened for 11 April
2022 and the related notice of meeting was dispatched to
shareholders on 4 March 2022. The notice of meeting is available
for viewing on the Company's web site.
Resignation of Non-Executive Chairman
On 11 March 2022, Mr Bernard Pryor resigned as Chairman of the
Board and long standing Non-Executive director Mr Khomotso Mosehla
was appointed as Chairman pending the outcome of the shareholder
requisitioned meeting scheduled for 11 April 2022.
23. Key management personnel
Remuneration arrangements of key management personnel are
disclosed in the annual financial report.
24. Financial Instruments
Fair value of financial assets and liabilities
The fair value of a financial asset or a financial liability is
the amount at which the asset could be exchanged or liability
settled in a current transaction between willing parties in an
arm's length transaction. The fair values of the Group's financial
assets and liabilities approximate their carrying values, as a
result of their short maturity or because they carry floating rates
of interest.
All financial assets and liabilities recorded in the
consolidated financial statements approximate their respective fair
values.
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Level 1 to 3, based on the degree to which
the fair value is observable.
Level 1 fair value measurements are those derived from quoted
prices in active markets for identical assets or liabilities. The
balances classed here are financial assets comprising deposits and
listed securities.
Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or
indirectly. The financial assets classed as Level 2 comprise of
investments with investment firms. These investments serve as
collateral for rehabilitation guarantees. The fair value has been
determined by the investment firms' fund statement.
Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are
not based on observable market data.
There were no assets reclassified into / out of fair value
through profit and loss ("FVTPL") during the year nor were any
assets transferred between levels.
As at 31 December 2021 ($'000) Level 1 Level Level Total
2 3
-------------------------------- ----------------- ------ ---------------- ------
Other Financial Assets 4,605 4,605
- 4,605 - 4,605
-------------------------------------------------- ------ ---------------- ------
As at 30 June 2021 ($'000) Level 1 Level Level Total
2 3
-------------------------------- ----------------- ------ ---------------- ------
Other Financial Assets 4,687 4,687
- 4,687 - 4,687
-------------------------------------------------- ------ ---------------- ------
Directors' Declaration
The Directors declare that in the directors' opinion,
1. The condensed financial statements and notes of the
consolidated entity are in accordance with the following:
a. complying with accounting standards and the Corporations Act 2001; and
b. giving a true and fair view of the consolidated entity's
financial position as at 31 December 2021 and of its performance
for the half-year ended on that date.
2. There are reasonable grounds to believe that the Company will
be able to pay its debts as and when they become due and
payable.
This declaration is made in accordance with a resolution of the
Board of Directors, made pursuant to section 303(5) of the
Corporations Act 2001.
On behalf of the Directors
________________________________ ________________________________
Khomotso Mosehla Sebastiano (Sam) Randazzo
Chairman Chief Executive Officer
11 March 2022 11 March 2022
Dated at Johannesburg, South Africa, this 11(th) day of March
2022.
Auditor's Independence Declaration
As lead auditor for the review of MC Mining Limited for the
half-year ended 31 December 2021, I declare that to the best of my
knowledge and belief, there have been:
1. no contraventions of the auditor independence requirements of
the Corporations Act 2001 in relation to the review; and
2. no contraventions of any applicable code of professional
conduct in relation to the review.
This declaration is in respect of MC Mining Limited and the
entities it controlled during the period.
Matthew Green Brisbane
Partner 11 March 2022
Mazars
Independent auditor's review report to the members of MC Mining
Limited
Report on the half-year financial report
Conclusion
We have reviewed the half-year financial report of MC Mining
Limited (the Company) and the entities it controlled during the
half-year (together the Group), which comprises the Condensed
consolidated statement of financial position as at 31 December
2021, the Condensed consolidated statement of changes in equity,
Condensed consolidated statement of cash flows and Condensed
consolidated statement of profit or loss and other comprehensive
income for the half-year ended on that date, significant accounting
policies and explanatory notes and the directors' declaration.
Based on our review, which is not an audit, we have not become
aware of any matter that makes us believe that the accompanying
half-year financial report of MC Mining Limited does not comply
with the Corporations Act 2001 including:
1. giving a true and fair view of the Group's financial position
as at 31 December 2021 and of its performance for the half-year
ended on that date;
2. complying with Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001.
Basis for conclusion
We conducted our review in accordance with ASRE 2410 Review of a
Financial Report Performed by the Independent Auditor of the Entity
(ASRE 2410). Our responsibilities are further described in the
Auditor's responsibilities for the review of the half-year
financial report section of our report.
We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the
ethical requirements of the Accounting Professional & Ethical
Standards Board's APES 110 Code of Ethics for Professional
Accountants (including Independence Standards) (the Code) that are
relevant to the audit of the annual financial report in Australia.
We have also fulfilled our other ethical responsibilities in
accordance with the Code.
Material uncertainty related to going concern
Responsibilities of the directors for the half-year financial
report
The directors of the Company are responsible for the preparation
of the half-year financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the
half-year financial report that gives a true and fair view and is
free from material misstatement whether due to fraud or error.
Auditor's responsibilities for the review of the half-year
financial report
Our responsibility is to express a conclusion on the half-year
financial report based on our review. ASRE 2410 requires us to
conclude whether we have become aware of any matter that makes us
believe that the half-year financial report is not in accordance
with the Corporations Act 2001 including giving a true and fair
view of the Group's financial position as at 31 December 2021 and
of its performance for the half-year ended on that date, and
complying with Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001.
A review of a half-year financial report consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with Australian Auditing Standards and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Mazars
Matthew Green Brisbane
Partner 11 March 2022
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BKNBBDBKBOND
(END) Dow Jones Newswires
March 14, 2022 03:00 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
