TIDMMCM
RNS Number : 0353P
MC Mining Limited
15 June 2022
ANNOUNCEMENT 15 June 2022
DESPATCH OF NOTICE OF GENERAL MEETING
MC Mining Limited (MC Mining or the Company), a coal
exploration, development and mining company operating primarily in
South Africa, announces that its Notice of Meeting, Explanatory
Statement and accompanying Proxy Form (together, the Notice of GM)
for a general meeting (GM) have today been sent to shareholders.
The Notice of GM is available on the Company's website
www.mcmining.co.za .
The GM will be held at 09:00 a.m. (London time) on 15 July 2022
as a virtual meeting by way of a live webcast.
The ASX record date to participate and vote at the GM is 9:00
a.m. on Wednesday, 13 July 2022. The record date to participate and
vote at the GM for the JSE is 9:00 a.m. on Friday, 8 July 2022 and
accordingly the last day to trade is Tuesday, 5 July 2022.
Background
On 1 February 2022, MC Mining announced that it had entered into
a staged ZAR 86,036,691 (approximately US$5.6 million/A$7.9
million) Convertible Advance and Subscription Agreement (the
Agreement) with South African resources investor, Senosi Group
Investment Holdings Proprietary Limited (SGIH). In consideration
for the provision of ZAR 86,036,691, and subject to the terms of
the Agreement, the Company agreed to issue SGIH up to 71,697,242
new ordinary shares of no par value (Ordinary Shares).
First Tranche Funding
In accordance with the terms of the Agreement, SGIH initially
loaned the Company ZAR 46,036,691 (approximately US$3.0 million)
(the First Tranche Funding), which amount subsequently converted
into 38,363,909 new Ordinary Shares (the First Tranche Shares) at
ZAR 1.20 (US$0.08/ A$0.11) per share (the Issue Price). The Issue
Price equated to an 11.1% premium to the ASX quoted closing price
of MC Mining on the last practicable date prior to the announcement
of this funding transaction.
The First Tranche Shares were issued by the Company on 6 April
2022 and resulted in SGIH acquiring 19.9% of MC Mining's issued
share capital. The First Tranche Funding was used to settle the
balance owing to the vendors of the Lukin and Salaita properties,
two critical properties for the Makhado hard coking coal project
(Makhado Project) and to supplement the MC Mining group working
capital requirements.
Second Tranche Funding
As part of the Agreement, SGIH also conditionally agreed to loan
the Company up to a further ZAR40 million (the Second Tranche
Funding), which amount would, subject to the receipt of all
required approvals, convert into an additional 33,333,333 new
Ordinary Shares (the Second Tranche Shares) at the Issue Price (the
Transaction). This issue would result in SGIH holding up to
approximately 31.71% of the Company's enlarged share capital
(assuming no further Ordinary Shares are issued).
The issue of the Second Tranche Shares is subject to MC Mining
shareholder approval [1] in accordance with Item 7 of Section 611
of the Corporations Act 2001, as the combined interest of SGIH will
exceed 20% of the Company's issued share capital. Under Australian
law, the Notice of GM must also include a report from an
independent expert on whether the issue of the Second Tranche
Shares is fair and reasonable to "non-associated" shareholders. The
independent expert's report (the Report) has been prepared by BDO
Corporate Finance (WA) Pty Ltd (BDO) and forms part of the Notice
of GM.
The first two instalments of the Second Tranche Funding have
been advanced in accordance with the agreed schedule set out below,
and Second Tranche Shares will be issued to SGIH if shareholders
pass Resolution 2. This approval was originally due to be sought on
or before 29 June 2022 but SGIH and the Company agreed to extend
this date to 15 July 2022, as well as to extend the third Second
Tranche Funding payment of ZAR 10 million ($0.6 million), from 30
June 2022 to 15 July 2022. The fourth Second Tranche funding
payment date remains as previously agreed. If the shareholder
approval is not obtained, as was the case with the case when the GM
was required to have been held by 29 June 2022, the final two
instalments of the Second Tranche Funding will not be advanced and
the amount already advanced under the Second Tranche Funding is
repayable by the Company within 30 days.
The timing and amount of the Second Tranche Funding is set out
below:
Date ZAR
30 April 2022 10,000,000
-----------
31 May 2022 10,000,000
-----------
15 July 2022 10,000,000
-----------
31 July 2022 10,000,000
-----------
Total 40,000,000
-----------
The Second Tranche Funding will be used to advance development
of the Makhado Project and to supplement MC Mining's group working
capital requirements. If shareholder approval is not obtained to
permit the issue of the Second Tranche Shares, the ZAR20 million
loan already advanced by SGIH will be repaid using part of the
ZAR60 million standby loan facility with Dendocept (Proprietary)
Limited, announced by the Company on 6 June 2022. If the funds
provided under the standby loan facility are applied to repayment
of the Second Tranche Funding, and based on, inter alia, prevailing
forward API4 coal prices and management of group facilities
including the new standby facility, the Company's cash runway is
expected to extend to beyond November 2022. In addition, MC Mining
is also pursuing several alternative options to secure the
necessary funding for the construction of the Makhado Project.
Summary of BDO findings
BDO considered the Transaction the subject of Resolution 2 in
accordance with Item 7 of Section 611 of the Australian
Corporations Act and concluded that the Transaction is "not fair
but reasonable" to "non-associated" shareholders (being
shareholders other than SGIH and those associated with SGIH). In
BDO's opinion, the Transaction is not fair because the value of an
Ordinary Share prior to the Transaction (on a control basis as
defined in BDO's report) is greater than the value of an Ordinary
Share following the Transaction (on a minority interest basis as
defined in BDO's report). It is noted that BDO's assessment of the
value of an MC Mining Ordinary Share was made through valuation
methodologies based on MC Mining's asset base, which it deemed to
be materially higher than the current equity market value of MC
Mining. However, BDO considered the Transaction to be "reasonable"
because the advantages of the Transaction to shareholders are
greater than the disadvantages.
The Report also includes an independent technical assessment and
valuation report prepared by SRK Consulting (Australasia) Pty Ltd
(SRK) (Technical Specialist Report). BDO relied on the Technical
Specialist Report when valuing MC Mining's mineral assets. The
Technical Specialist Report was prepared in accordance with the
Australasian Code for Public Reporting of Technical Assessments and
Valuation of Mineral Assets (2015 Edition) and the Australasian
Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (2012 Edition). The valuation methodologies used by
SRK (and which are referred to in the Report) are set out in detail
in the Technical Specialist Report.
Under the BDO valuation, the value of an MC Mining share prior
to the Transaction, and the value of an MC Mining share following
the Transaction, per the Report, are compared below:
Low US$ Preferred [2] High US$
US$
Value of a MC Mining Ordinary Share prior to the Transaction on a control basis 0.427 0.620 0.878
-------- -------------- ---------
Value of a MC Mining Ordinary Share following the Transaction on a minority
basis 0.303 0.454 0.659
-------- -------------- ---------
Further information on the value of MC Mining
For reference, as at 14 June 2022, being the last practicable
date prior to this announcement, the price per MC Mining Ordinary
Share was US$0.096 on the Australian Stock Exchange (converted at
A$1.45:US$1.00).
SRK Technical Specialist Report
SRK reviewed the project technical assumptions and provided an
assessment on the reasonableness of the techno-economic assumptions
in the Uitkomst Colliery and Makhado Project cash flow models that
consider the life of mine plans developed by MC Mining, including
the Coal Resource and Coal Reserve Estimates, the mining methods,
the processing assumptions, infrastructure requirements, the
operating costs, the capital expenditure and the environmental and
permitting provisions. On this basis, SRK estimates the current
market value to be between ZAR3,202 million and ZAR4,932 million,
with a preferred value of ZAR4,067 million for the attributable
residual Coal Resources held by MC Mining [3] .
Shareholders are advised to read the Notice of Meeting,
including the Report, in its entirety.
Related Party Transaction
The amendment to the timing for SGIH's advancement of the third
instalment of the Second Tranche Funding to the Company (the
Timetable Revision) , as set out above, is deemed a related party
transaction under the AIM Rules for Companies. The independent
directors of the Board, being those directors other than Mr Senosi,
having consulted with Strand Hanson Limited, the Company's
Nominated Adviser, consider the Timetable Revision to be fair and
reasonable insofar as the Company's shareholders are concerned.
Board recommendation
Shareholders are directed to carefully consider the Notice of GM
(including the Report and the Technical Specialist Report) for the
purposes of deciding how to vote on Resolution 1 and 2. The MC
Mining Board is not aware of any other information that
shareholders might reasonably require to make a decision whether it
is in the best interest of the Company to vote in favour or against
Resolution 1 and 2. The Board, other than Mr M. Senosi, who is
interested in the Resolutions, recommends shareholders vote in
favour of Resolution 1. However, and because of BDO's conclusion,
the Board of MC Mining has decided not to make a recommendation in
relation to Resolution 2.
Authorised by
Godfrey Gomwe
Chief Executive Officer
This announcement has been approved by the Company's Disclosure
Committee.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation No. 596/2014, which forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018 (as amended).
All amounts are in US dollars or South African rand unless
stated differently.
For more information contact:
Tony Bevan Company Secretary Endeavour Corporate Services +61 8 9316 9100
Company advisors:
James Harris / James Dance Nominated Adviser Strand Hanson Limited +44 20 7409 3494
Rory Scott Broker (AIM) Tennyson Securities Limited +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).
Statements of intention
Statements of intention are statements of current intentions
only, which may change as new information becomes available or
circumstances change.
[1] The Notice of GM also seeks, in Resolution 1, MC Mining
shareholder ratification of issuance of the First Tranche Shares
under and in accordance with ASX Listing Rule 7.1 and 7.1A. The
Board recommends shareholders vote in favour of Resolution 1.
[2] P referred values are the midpoint of the range unless
otherwise stated.
[3] The full Technical Specialist Report forms part of the
Notice of GM.
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
MSCFLFFERVIELIF
(END) Dow Jones Newswires
June 15, 2022 11:25 ET (15:25 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