MC Mining Limited Uitkomst Coal Sales & Marketing Agreement (1071U)
July 28 2022 - 6:21AM
UK Regulatory
TIDMMCM
RNS Number : 1071U
MC Mining Limited
28 July 2022
ANNOUNCEMENT 28 July 2022
UITKOMST COAL SALES & MARKETING AGREEMENT
RELATED PARTY TRANSACTION
MC Mining Limited (MC Mining or the Company) is pleased to
announce that it has entered into a Coal Sales & Marketing
Agreement (Marketing Agreement) with Overlooked (Proprietary)
Limited (Overlooked). The Marketing Agreement expires on 31
December 2022 and will facilitate the export of coal produced by
Uitkomst, ensuring the colliery benefits from the prevailing
international coal prices.
The anti-fossil fuel sentiment over the last few years has
resulted in limited coal exploration or development of new coal
projects and a tightening of supply globally. This has been
exacerbated by the invasion of Ukraine in February 2022 and
subsequent sanctions against Russian fossil fuel supplies, leading
to a global energy shortage. This led to international thermal coal
prices climbing to record highs and API4 coal prices averaged $276/
tonne (t) for H1 CY2022, compared to $151/t in H2 CY2021.
As a consequence, MC Mining commenced a review of its marketing
arrangements for Uitkomst which include the production of various
grades of higher quality, low ash pulverised coal injection (PCI)
coal, as well as higher-yielding API4 thermal coal. The high API4
prices confirm that the export of thermal coal is currently the
optimal marketing strategy for the colliery. However, Uitkomst does
not have access to export allocation at any of the South African
coal ports and produces limited quantities of thermal coal on a
monthly basis. A collaborative approach with an exporter, which
already has access to these markets and additional volumes of API4
coal, led to the conclusion of the Marketing Agreement with
Overlooked, providing the Company with a route to market.
The salient features of the Marketing Agreement are:
-- contract expiring in December 2022;
-- sale of at least 20,000t of Uitkomst coal per month at
API4-linked, US dollar denominated prices;
-- Overlooked is responsible for the transportation, stockpiling
and export of the coal at port and will receive a market related
commission; and
-- Overlooked charges a competitive marketing fee of 5% of the
sales price which is reasonable considering competing proposals
received by Uitkomst, for providing access to the international
market.
Related Party Transaction
The Company entering into the Marketing Agreement, as set out
above, is deemed a related party transaction under the AIM Rules
for Companies due to Mr Matthews Senosi (a Non-Executive Director
and Substantial Shareholder (as defined by the AIM Rules) of the
Company) being the Chief Executive Officer and majority shareholder
of Overlooked. The independent directors of the Board of MC Mining,
being those directors other than Mr Senosi, having consulted with
Strand Hanson Limited, the Company's Nominated Adviser, consider
the Marketing Agreement to be fair and reasonable insofar as the
Company's shareholders are concerned.
Godfrey Gomwe , Managing Director and Chief Executive Officer of
MC Mining, commented :
"Uitkomst is a small mine that produces high quality coal and
the trial production of different coal products earlier in the year
ensured that we have a better understanding of what the colliery
can produce and the effects these have on our processing plant
yields. The colliery does not produce sufficient coal to fill a
ship on a monthly basis and a partnership with Overlooked will
facilitate more frequent shipments at higher international thermal
coal prices. These prices have remained higher than previously
forecasted and the Marketing Agreement ensures that Uitkomst
benefits from the prevailing price, particularly our pea-sized
products, as these were historically sold into domestic fixed-price
contracts. The colliery will continue to supply coal to the local
market, but at reduced volumes."
Godfrey Gomwe
Managing Director and Chief Executive Officer
This announcement has been approved by the Company's Disclosure
Committee.
All figures are in United States dollars unless otherwise
stated.
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014, as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 (as amended).
For more information contact:
Tony Bevan Company Secretary Endeavour Corporate Services +61 08 9316 9100
Company advisors:
James Harris / James
Dance Nominated Adviser Strand Hanson Limited +44 20 7409 3494
Rory Scott Broker (AIM) Tennyson Securities +44 20 7186 9031
James Duncan Financial PR (South Africa) R&A Strategic Communications +27 11 880 3924
Investec Bank Limited is the nominated JSE Sponsor
About MC Mining Limited:
MC Mining is an AIM/ASX/JSE-listed coal exploration, development
and mining company operating in South Africa. MC Mining's key
projects include the Uitkomst Colliery (metallurgical and thermal
coal), Makhado Project (hard coking coal), Vele Colliery (semi-soft
coking and thermal coal), and the Greater Soutpansberg Projects
(coking and thermal coal).
All figures are denominated in United States dollars unless
otherwise stated. Safety metrics are compared to the preceding
quarter while financial and operational metrics are measured
against the comparable period in the previous financial year. A
copy of this report is available on the Company's website,
www.mcmining.co.za .
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END
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