TIDMMCM
RNS Number : 5812E
MC Mining Limited
30 June 2023
Announcement 30 June 2023
MAKHADO PROJECT - SIGNIFICANT INCREASES IN MINE LIFE AND COAL
RESERVES
MC Mining Limited (MC Mining or the Company) is pleased to
announce the results of the updated Life of Mine (LOM) plan and
Coal Reserve estimate for its fully-licensed and shovel-ready
Makhado steelmaking hard coking coal project (Makhado Project,
Makhado or the Project).
Highlights:
-- the updated LOM plan(2) demonstrates a significantly
increased mine life (+27%), at a higher annual mine production rate
(+25%) and results in robust project financial returns, whilst
using updated conservative cost, macro-economic and coal price
assumptions;
-- Proved and Probable Coal Reserves estimates, reported in
accordance to JORC Code guidelines [1] , have substantially
increased (+53%, from 69 to 106 million tonnes (Mt) [2] ) as a
result of the detailed mine designs completed for the East Pit
deposit in preparation for mine start; and
-- steady progress has been made with critical early works activities in line with the Project's Implementation Plan [3] .
The LOM plan builds on the recently completed five-year
Implementation Plan that envisaged initially mining the East Pit.
The plan incorporates the exploitation of all portions of the East,
Central and West coal deposits that are mineable by surface mining
methods. The Coal Reserve estimate is derived from this updated LOM
plan that applies updated costs, macro-economic and coal price
assumptions.
The updated LOM plan and Coal Reserve estimate are required to
conclude funding discussions that are part of the ongoing
implementation of the Makhado Project mine-build. The Project is
67.3%-owned by MCM through a local subsidiary, Baobab Mining &
Exploration Pty Ltd (BM&E). All figures are reported for the
full project in US$ and ZAR.
-- The updated LOM plan is a significant improvement on the
Scenario 2 plan completed in August 2022 to a pre-feasibility level
of confidence (Scenario 2) [4] , as is demonstrated by:
o improved production metrics:
-- a 25% increase in the targeted rate of mining from 3.2 to 4.0
million (M) tonnes per annum (Mtpa) run-of-mine (ROM) coal; and
-- a 100% increase in coal handling and processing plant
capacity, from 2.0 to 4.0 Mtpa; resulting in
-- a 30% increase in planned annual sales of 64 Mid Volatile
(Vol) steelmaking hard coking coal (HCC) to 0.81 Mtpa and a 15%
increase in planned annual sales of 5,500 kcal thermal coal (TC) to
0.62 Mtpa ([5]) ;
-- a 60% increase of total salable coal products from 26 to 41
million tonnes (Mt) over the mine life;
-- a 27% increase in the LOM from 22 to 28 years; and
-- the time to first production increasing from 12 to 18 months
due to the new plant build whilst keeping the payback period
materially unchanged at 3.5 years from the start of
construction.
o using updated and conservative cost and macro-economic
assumptions that account for recent inflationary and market cost
escalations in key production inputs, these being:
-- a 6% increase in estimated fully-allocated costs (C3) to
average US$83 (ZAR1,563) per tonne of saleable coal over the
LOM;
-- an 11% increase in the estimated project peak funding
requirements to US$96 M (ZAR1.8 billion (Bn));
-- a 22% increase in the forecast ZAR:US$ foreign currency
exchange (Forex) rate from ZAR15.47 to average ZAR18.83 [6] over
the LOM;
-- a marginally higher indexed premium HCC price forecast from
US$212 to US$215 per tonne sold on a free on board basis (FOB) [7]
over the LOM, sourced from independent advisors Afriforesight;
and
-- a marginally higher indexed API4 thermal coal price (6,000
kcal) forecast from US$106 to US$108 per tonne (FOB) [8] over the
LOM.
o resulting in the following planned financial returns for the
Project:
-- a 20% improvement in free cashflows to US$936 M (ZAR17.6
Bn);
-- a 17% increase in the post tax Net Present Value (NPV) from
ZAR5.8 Bn (real, post-tax, at a 6% discount rate) to ZAR6.8Bn (due
to exchange rate movements, a 4% reduction in US$ terms to US$361
M); and
-- an internal rate of return (IRR) (real, post-tax) of 37% and
EBITDA margin of 30%.
-- Proved and Probable Coal Reserves estimates, reported in
accordance to JORC Code guidelines, have substantially increased
compared to the estimates reported previously [9] , to result
in:
o a 53% increase in total Coal Reserves from 69 to 106 Mt due to
the revision in the East Pit optimisation and mine design;
o a 64% increase in salable steelmaking HCC from 13.7 to 22.5 Mt
achieved at an overall yield of 21.2%; and
o a 57% increase in salable TC from 11.9 to 18.7 Mt achieved at
an overall yield of 17.6%.
The Coal Resource estimate on which this Coal Reserve estimate
is based remains unchanged at 296 Mt of mineable tonnes in situ
(MTIS) in the Measured and Indicated categories as previously
announced by the Company [10] . The reported Coal Resource is
inclusive of the Coal Reserve.
-- Steady progress has been made with critical early works
activities in line with the Implementation Plan, to advance the
Project towards commencement of production, including:
o commencement with works relating to the power supply overhead
transmission line;
o construction of a bridge across the Mutamba river to provide
access to the project site;
o order placement for key long-lead items; and
o progressing with the selection of mine-operating
contractors.
Chief Executive Officer, Mr. Godfrey Gomwe, commented:
"The Makhado Project continues to progress on schedule in
preparation for first coal production to no later than 18 months
after construction starts. We are pleased to see a substantial
increase in our Coal Reserves and consequently mine life at a
much-improved annual production rate for saleable coal products.
This bodes well for moving operations down the cost curve whilst
aiming to take advantage of the near-term steelmaking HCC coal
price boons. We continue to focus on advancing early works
activities whilst funding activities are concluded in H2 CY2023, so
that mine commissioning meets scheduled [production?] timelines. We
are also excited to have strong contenders to be our partner mining
contractors and partner coal beneficiation plant operating
contractors in the managed tender processes currently under way and
due for completion during the third quarter of 2023."
Key Project metrics are provided in the following tables.
Table 1: Key Production Parameters
Mining Production Rate - (Average) Mtpa 3.9
---------------- -----
Total ROM Mined (over the mine life) Mt 106
---------------- -----
Total Waste Mined (over the mine life) BCM ( million) 260
---------------- -----
Stripping Ratio (Waste: ROM) BCM:tonnes 2.5
---------------- -----
Steelmaking HCC Yield % 21.2
---------------- -----
TC Yield % 17.6
---------------- -----
Total Coal Sales - All Products Mt 41.2
---------------- -----
Coal Sales 5,500 kcal TC - Export Mt 18.7
---------------- -----
Coal Sales - Steelmaking HCC (Domestic and Export) Mt 22.5
---------------- -----
Steelmaking HCC - Domestic Mt 11.2
---------------- -----
Steelmaking HCC - Export Mt 11.3
---------------- -----
Figure 1: ZAR:US$ foreign exchange rate forecast assumptions
(real) as provided by ABSA Bank as of June 2023.
Figure 2: Coal Prices forecast assumptions (real) as provided by
Afriforesight as of June 2023.
Table 2: Calculations Showing Adjustments from Indexed to
Realised Coal Prices (averages over the life of mine)
Indexed HCC Premium (source: Afriforesight
June 2023 forecast) 215
--------------------------------------------- ----
Price Discount [11] -21
--------------------------------------------- ----
Realised 64 mid vol HCC Price (Export) 193
--------------------------------------------- ----
Sales Price adjustments -19
--------------------------------------------- ----
Realised 64 mid vol HCC Price (Domestic) 175
--------------------------------------------- ----
Indexed TC - 6,000 kcal (source:
Afriforesight June 2023 forecast) 108
--------------------------------------------- ----
Price Discount -17
--------------------------------------------- ----
Sales Price adjustments [12] -61
--------------------------------------------- ----
Realised TC 5,500 kcal Price 29
--------------------------------------------- ----
Table 3: Capital Expenditure Estimate
Construction Capital + 10% Contingency 90.8 1,709
------ ------
Extension Capital + 20% Contingency
(From Year 14) 28.6 539
------ ------
Sustaining Capital 12.7 240
------ ------
Total LOM Capital (+/-15%) 132.1 2,488
------ ------
Table 4: Operating Margins Parameters
Fully-allocated Cost Margin (C3 Margin) 27%
----
EBITDA Margin 30%
----
Table 5:Comparison of LOM Plan (June 2023) to Scenario 2 Plan
(August 2022)
Production Metrics
Total ROM Mined (over
the mine life) Mt 106 69 37
------------- ----- ----- ----
Total Waste Mined (over
the mine life) BCM 260 146 114
------------- ----- ----- ----
Stripping Ratio (Waste:
ROM) BCM:t 2.5 2.1 0.3
------------- ----- ----- ----
Coal Sales - 5,500 kcal
TC - Export Mt 18.7 11.9 6.8
------------- ----- ----- ----
Coal Sales - steelmaking
64 Mid Vol HCC Mt 22.5 13.7 8.8
------------- ----- ----- ----
Construction period Months 18 12 6
------------- ----- ----- ----
Macro-economic Assumptions and Coal Prices
Long term ZAR:US$ exchange
rate used(2) ZAR:US$ 18.8 15.5 3.4
------------- ----- ----- ----
Benchmark
Prices (real,
long term) Premium HCC price(3) US$/t 215 212 3
---------------------- ------------- ----- ----- ----
API4 (6,000 kcal)
thermal coal
price(4) US$/t 108 106 2
---------------------- ------------------------------ ----- ----- ----
Realised 64 Mid Vol HCC
Prices (real) (export) US$/t 193 177 16
---------------------- ------------- ----- ----- ----
64 Mid Vol HCC
(domestic) US$/t 175 171 3
---------------------- ------------------------------ ----- ----- ----
TC 5,500 kcal US$/t 29 61 -32
---------------------- ------------------------------ ----- ----- ----
Cost Estimates
Fully-allocated Unit Costs US$/salable
(C3) t 83 78 5
------------- ----- ----- ----
Construction Capital ZAR 'Bn 1.7 1.2 0.5
------------- ----- ----- ----
Financial Evaluation
Outcomes
------------- ----- ----- ----
Peak Funding Requirements ZAR 'Bn 1.8 1.3 0.5
------------- ----- ----- ----
Free cashflow (post tax) ZAR 'Bn 17.6 12.1 5.5
------------- ----- ----- ----
Post-tax IRR % 37 41 -4
------------- ----- ----- ----
Post-tax NPV(6%) ZAR 'Bn 6.8 5.8 1
------------- ----- ----- ----
Post-tax NPV(10%) ZAR 'Bn 4.0 3.8 0.2
------------- ----- ----- ----
Average payback period
(years) Years 3.5 3.5 0
------------- ----- ----- ----
The NPV is most sensitive to variances in the USD:ZAR Forex
rate, HCC price and HCC yields. The NPV increases by 45%, 35% and
25%, respectively, when the USD:ZAR Forex rate, HCC price and HCC
yields are each increased by 10%. Conversely, the NPV is less
sensitive to changes in mining operating costs and product trucking
costs. The NPV decreases by 12% and 9% when mining costs and
product trucking costs are increased by 10% respectively.
The break-even indexed premium HCC and API4 TC (6,000 kcal)
prices, where the NPV is zero, were calculated to be US$171/t and
US$86/t, respectively at the production ratios presented in the LOM
Plan.
The LOM Plan is an improvement, in many aspects, on the project
development scenario selected in August 2022 (Scenario 2) as the
preferred plan to be taken forward. Whilst the Scenario 2 plan was
compiled at a pre-feasibility level of confidence (+/-30%), the LOM
plan has been prepared with capital cost estimates within a +/-10%
accuracy level for the first five years of the project and
thereafter within +/- 30%. The capex for the first five years,
exluding any sustaining capex, is ZAR1.7Bn to construct the Makhado
Project (+/-10% accuracy) while LOM plan includes a further
ZAR0.5Bn (+/-30% accuracy) to develop the Central and West pits.
The reference date for the cost estimates is April 2023.
CRITICAL EARLY WORKS IMPLEMENTATION PROGRESS
The Company continues with critical early works being:
-- commencement with detailed design, procurement and
construction of the power supply overhead transmission line, with
construction team now mobilised onsite - a critical path
activity;
-- refurbishment of onsite accommodation to house project construction crews;
-- placement of orders for key long-lead time items;
-- progress with the managed tender processes for selecting
contractors to partner as the lead mining and coal beneficiation
plant operating contractors;
-- mobilisation of construction contractors for the construction
of the main access road, main bridge and civil works for bulk water
reticulation; and
-- progress with erection of fencing to secure the project site.
SUMMARY OF COAL RESERVES ESTIMATE
Coal Reserves Estimate Update
MCM's equity share in Makhado is 67.3%. A summary of the Gross
net Coal Reserve estimate is shown in Table 65.
Table 6: Makhado Project Coal Reserves Estimate as at 28 June
2023 (Gross)
East Pit Proved 49 695 22.3% 11 101 17.6% 8 743
------------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 4 878 23.2% 1 129 17.3% 843
------------------------ ------------------ ------ ------------------- ------ -------------------
Total 54 573 22.4% 12 230 17.6% 9 586
------------------------ ------------------ ------ ------------------- ------ -------------------
Central Pit Proved 21 947 21.3% 4 685 17.1% 3 747
------------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 1 158 24.7% 286 16.9% 196
------------------------ ------------------ ------ ------------------- ------ -------------------
Total 23 105 21.5% 4 971 17.1% 3 944
------------------------ ------------------ ------ ------------------- ------ -------------------
West Pit Proved 26 114 18.7% 4 885 18.3% 4 791
------------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 2 462 17.5% 431 15.3% 376
------------------------ ------------------ ------ ------------------- ------ -------------------
Total 28 576 18.6% 5 317 18.1% 5 167
------------------------ ------------------ ------ ------------------- ------ -------------------
Combined Proved 97 756 21.1% 20 672 17.7% 17 281
------------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 8 498 21.7% 1 846 16.7% 1 415
------------------------ ------------------ ------ ------------------- ------ -------------------
Total 106 254 21.2% 22 518 17.6% 18 697
------------------------ ------------------ ------ ------------------- ------ -------------------
Gross Coal Reserve Estimate (Proved and Probable) as at 28 june
2023
Notes
1. GTIS based on a 1.4 washability
2. MTIS excludes the Fripps Farm and is limited to the 200 m depth cut-off.
3. MTIS includes geological losses of 5% on Measured, 8% on
Indicated and 10% on Inferred Coal Resources.
4. Quality parameters applied to GTIS to obtain MTIS.
5. Minimum coal seam thickness of 0.5 m applied.
6. HCC Ash content <= 10%, TC Ash content <= 25.9% and Volatile material > 20%.
7. The Coal Reserve estimation includes diluted Measured and
Indicated Coal Resources only.
8. No Inferred Coal Resources have been included in the Coal Reserve estimation.
9. The Coal Reserve estimate was completed using a realised coal
price of US$193t for 64 Mid Vol HCC (export) and US$29/t for TC
5,000 kcal after product quality discounts and offtake-related
deductions were applied.
Key Assumptions and JORC Code Requirements
Coal Resources are reported inclusive of Coal Reserves.
The coal price assumptions used to estimate Coal Reserves were
indexed values of US$215/t for steelmaking premium HCC and US$108/t
for API4 Thermal Coal (6,000 kcal), on a real basis. The
corresponding realised coal prices for two salable products after
making quality and sales price adjustments were US$193/t for the 64
Mid Vol HCC for export and US$29/t for the TC 5,500 kcal at an
assumed ZAR:US$ Forex rate of ZAR18.83. The long-term indexed coal
price forecasts were sourced from Afriforesight and the Forex rate
assumptions were sourced from ABSA Bank Ltd as of June 2023.
The Coal Resources and Coal Reserves have been classified in
accordance with the guidelines set out in the Australasian Code for
Reporting Exploration Results, Mineral Resources and Ore Reserves,
published by the Joint Ore Reserves Committee (JORC), of the
Australasian Institute of Mining and Metallurgy, the Australian
Institute of Geoscientists and the Minerals Council of Australia,
December 2012 (the JORC Code or JORC 2012).
Material Information for the Makhado Project coal deposit,
including a summary of material information pursuant to ASX Listing
Rule 5.9 and the Assessment and Reporting Criteria in accordance
with JORC 2012 requirements in the body of this anouncement, may be
found on the Company's website:
https://protect-za.mimecast.com/s/s9V-Cg5yVQI3GEmTNJvpn?domain=mcmining.co.za
The conversion from mineable tonnes in situ Coal Resource (MTIS)
to Coal Reserves is illustrated in the waterfall chart in Figure
3.
Figure 3: Coal Resource to Coal Reserve Conversion Waterfall
Chart
Coal Resources and Coal Reserves Governance Statement
In accordance with ASX Listing Rule 5.21.5, governance of the
Company's Coal Resources and Coal Reserves development and
management activities are through the management and owner's team
for MCM.
Senior geological and mining engineering staff contracted by MCM
oversee reviews and technical evaluations of the estimates and
evaluate these with reference to industry standards and empirical
estimates for physical, cost and performance measures. The
evaluation process also draws upon internal skill sets in
operational and project management, coal processing and
commercial/financial areas of the business.
The MCM Safety, Health, Environment and Technical Committee
(SHETech Committee) is responsible for monitoring the planning,
prioritisation and progress of the estimation and reporting of Coal
Resources. These definition activities are conducted within a
framework of quality assurance and quality control protocols
covering aspects including drill hole siting, sample collection,
sample preparation and analysis as well as sample and data
security. The SHETech Committee is responsible for the reporting of
Coal Reserves.
A four-level compliance process guides the control and assurance
activities by the SHETech Committee, being:
-- provision of Company policies, standards, procedures and guidelines;
-- Coal Resources and Coal Reserves reporting based on
well-founded geological and mining assumptions and compliance with
external standards such as the JORC Code;
-- internal and third-party reviews of process conformance and compliance; and
-- internal and third-party assessment of compliance and data veracity.
The Company reports its Coal Resources and Coal Reserves, as a
minimum, on an annual basis and in accordance with ASX Listing Rule
5.21 and clause 14 of Appendix 5A (the JORC Code). Competent
Persons named by the Company are either members of the South
African Institute of Mining and Metallurgy or the South African
Council for Natural Scientific Professions, which are 'Recognised
Professional Organisations' (RPOs), included in a list promulgated
by the ASX from time to time, hence qualify as Competent Persons as
defined in the JORC Code.
Summary of Material Information
The updated Coal Reserve estimate reported in Table 6 is based
on the Coal Resource estimate as reported by the Company as of 28
June 2022 with modifying factors applied. The modifying factors and
associated criteria used in determining the Coal Reserve are
summarised below, in accordance with ASX Listing Rule 5.9.1.
Table 7: Modifying Factors for Coal Reserves Calculations
Minimum Mineable Coal Seam Thickness m 0.5
--- ------
Geological Losses (Measured & Indicated) % 5 & 8
--- ------
Mining Loss Factor % 5
--- ------
Minimum Product Volatiles % 20
--- ------
Mining Contamination % 5
--- ------
Practical Yield % 95
--- ------
Comparison of Coal Reserves Estimates
Tables 6 to 9 compare the 2022 Coal Reserves estimate with the
updated Coal Reserve estimate as at 28 June 2023. Changes in the
Coal Reserves are due to the revision of pit optimisations and
detailed mine designs of the East Pit. MCM's equity share is 67.3%
of the Coal Reserves estimate shown below. Coal Reserves are
included in the Coal Resource estimate.
Table 8: Makhado Project Coal Reserves Changes from Previous
Estimate - East Pit (gross)
30-Jun-22 Proved 14 739 19.1% 2 814 16.1% 2 369
----------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 2 925 21.0% 614 15.3% 448
---------------------- ------------------ ------ ------------------- ------ -------------------
Total 17 663 19.4% 3 428 15.9% 2 816
---------------------- ------------------ ------ ------------------- ------ -------------------
Changes Proved 34 956 3.2% 8 287 1.5% 6 375
----------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 1 954 2.1% 515 2.0% 395
---------------------- ------------------ ------ ------------------- ------ -------------------
Total 36 910 3.0% 8 802 1.6% 6 770
---------------------- ------------------ ------ ------------------- ------ -------------------
28-Jun-23 Proved 49 695 22.3% 11 101 17.6% 8 743
----------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 4 878 23.2% 1 129 17.3% 843
---------------------- ------------------ ------ ------------------- ------ -------------------
Total 54 573 22.4% 12 230 17.6% 9 586
---------------------- ------------------ ------ ------------------- ------ -------------------
Table 9: Makhado Project Coal Reserves Changes from Previous
Estimate - Central Pit (gross)
30-Jun-22 Proved 21 947 21.3% 4 685 17.1% 3 747
----------- ---------- -------------------- ------ -------------------- ------ --------------------
Probable 1 158 24.7% 286 16.9% 196
---------------------- -------------------- ------ -------------------- ------ --------------------
Total 23 105 21.5% 4 971 17.1% 3 944
---------------------- -------------------- ------ -------------------- ------ --------------------
Changes Proved - 0.0% - 0.0% -
----------- ---------- -------------------- ------ -------------------- ------ --------------------
Probable - 0.0% - 0.0% -
---------------------- -------------------- ------ -------------------- ------ --------------------
Total - 0.0% - 0.0% -
---------------------- -------------------- ------ -------------------- ------ --------------------
28-Jun-23 Proved 21 947 21.3% 4 685 17.1% 3 747
----------- ---------- -------------------- ------ -------------------- ------ --------------------
Probable 1 158 24.7% 286 16.9% 196
---------------------- -------------------- ------ -------------------- ------ --------------------
Total 23 105 21.5% 4 971 17.1% 3 944
---------------------- -------------------- ------ -------------------- ------ --------------------
Table 10: Makhado Project Coal Reserves Changes from Previous
Estimate - West Pit (gross)
30-Jun-22 Proved 26 114 18.7% 4 885 18.3% 4 791
----------- ---------- -------------------- ------ -------------------- ------ --------------------
Probable 2 462 17.5% 431 15.3% 376
---------------------- -------------------- ------ -------------------- ------ --------------------
Total 28 576 18.6% 5 317 18.1% 5 167
---------------------- -------------------- ------ -------------------- ------ --------------------
Changes Proved - 0.0% - 0.0% -
----------- ---------- -------------------- ------ -------------------- ------ --------------------
Probable - 0.0% - 0.0% -
---------------------- -------------------- ------ -------------------- ------ --------------------
Total - 0.0% - 0.0% -
---------------------- -------------------- ------ -------------------- ------ --------------------
28-Jun-23 Proved 26 114 18.7% 4 885 18.3% 4 791
----------- ---------- -------------------- ------ -------------------- ------ --------------------
Probable 2 462 17.5% 431 15.3% 376
---------------------- -------------------- ------ -------------------- ------ --------------------
Total 28 576 18.6% 5 317 18.1% 5 167
---------------------- -------------------- ------ -------------------- ------ --------------------
Table 11: Makhado Project Coal Reserves Changes from Previous
Estimate - East, Central and West Pits combined (gross)
30-Jun-22 Proved 62 800 19.7% 12 384 17.4% 10 907
----------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 6 545 20.3% 1 331 15.6% 1 020
---------------------- ------------------ ------ ------------------- ------ -------------------
Total 69 345 19.8% 13 716 17.2% 11 927
---------------------- ------------------ ------ ------------------- ------ -------------------
Changes Proved 34 956 1.4% 8 287 0.3% 6 375
----------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 1 954 1.4% 515 1.1% 395
---------------------- ------------------ ------ ------------------- ------ -------------------
Total 36 910 1.4% 8 802 0.4% 6 770
---------------------- ------------------ ------ ------------------- ------ -------------------
28-Jun-23 Proved 97 756 21.1% 20 672 17.7% 17 281
----------- ---------- ------------------ ------ ------------------- ------ -------------------
Probable 8 498 21.7% 1 846 16.7% 1 415
---------------------- ------------------ ------ ------------------- ------ -------------------
Total 106 254 21.2% 22 518 17.6% 18 697
---------------------- ------------------ ------ ------------------- ------ -------------------
Notes: Gross Coal Reserve Estimate (Proved and Probable) as at
28 June 2023
1. GTIS based on a 1.4 washability.
2. MTIS excludes the Fripps Farm and is limited to the 200 m depth cut-off.
3. MTIS includes geological losses of 5% on Measured, 8% on
Indicated and 10% on Inferred Coal Resources.
4. Quality parameters applied to GTIS to obtain MTIS.
5. Minimum coal seam thickness of 0.5 m applied.
6. HCC Ash content <= 10%, TC Ash content <= 25.9% and Volatile material > 20%.
7. The Coal Reserve estimation includes diluted Measured and
Indicated Coal Resources only.
8. No Inferred Coal Resources have been included in the Coal Reserve estimation.
9. The Coal Reserve estimate was completed using a realised coal
price of US$193t for HCC (export) and US$29/t for TC after product
quality discounts and offtake-related deductions.
COMPETENT PERSONS STATEMENTS
Coal Resources Estimate
The information in this report that relates to Coal Resources
has been compiled by technical consultants and employees of MCM
under the supervision of Mr John Sparrow B.Sc. (Hons), M.Sc. (Econ.
Geol), SAIMM. Mr Sparrow is a full-time employee of MCM and has
sufficient experience which is relevant to the style of
mineralisation and types of deposit under consideration and to the
activities which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves". Mr Sparrow consents to the inclusion in this report of
the matters based on his information in the form and context in
which it appears.
Coal Reserves Estimate
The information in this report that relates to Coal Reserves has
been compiled by technical consultants and employees of MCM under
the supervision of Mr Ben Bruwer, B Engineering (Mining
Engineering), SAIMM. Mr. Bruwer is a principal mining consultant at
ABCONN Engineering Pty Ltd. Mr Bruwer has sufficient experience
which is relevant to the style of mineralisation and types of
deposit under consideration and to the activities which he is
undertaking to qualify as a Competent Person as defined in the 2012
Edition of the "Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves". Mr Bruwer consents to
the inclusion in this report of the matters based on his
information in the form and context in which it appears.
WAY FORWARD
The Company anticipates that the funding arrangements will be
concluded in H2 CY2023. The tender adjudication for major
contractors, notably the mining contractor and CHPP operator, is
expected to be completed in early Q3 CY2023, followed by the final
investment decision, ensuring that the Makhado Project execution
processes are broadened from early works to include full scale
implementation. First coal production remains expected no later
than 18 months from construction start-date.
Godfrey Gomwe
Managing Director and Chief Executive Officer
This announcement has been approved by the Company's Disclosure
Committee.
All figures are in South African rand or United States dollars
unless otherwise stated.
For more information contact:
Endeavour Corporate
Tony Bevan Company Secretary 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 +44 20 7186 9031
Financial PR (South R&A Strategic
Marion Brower Africa) Communications +27 11 880 3924
BSM Sponsors Proprietary Limited is the nominated JSE Sponsor
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as
it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended.
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 .
Glossary
Term Definition
MCM/ the Company MC Mining LImited
BM&E Baobab Mining & Exploration (Pty) Ltd
Mtpa Million tonnes per annum
HCC hard coking coal
TC Thermal coal
Mt Million tonnes
Bn Billion
FOB Free on board
Forex Foreign exchange rate
NPV Net present value
IRR Internal rate of return
m Million
GTIS Gross tonnes in situ
MTIS mineable tonnes in situ
JORC Australasian Code of Reporting of Exploration Results, Mineral Resources and
Ore Reserves,
2012 Edition
SHETech Committee Safety, Health, Enmvitonment & Technical Committee
SAIMM South African Institute of Mining and Metallurgy
Forward-looking statements
This Announcement, including information included or
incorporated by reference in this Announcement, may contain
"forward-looking statements" concerning MC Mining that are subject
to risks and uncertainties. Generally, the words "will", "may",
"should", "continue", "believes", "expects", "intends",
"anticipates" or similar expressions identify forward-looking
statements. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements. Many of
these risks and uncertainties relate to factors that are beyond MC
Mining's ability to control or estimate precisely, such as future
market conditions, changes in regulatory environment and the
behaviour of other market participants. MC Mining cannot give any
assurance that such forward-looking statements will prove to have
been correct. The reader is cautioned not to place undue reliance
on these forward-looking statements. MC Mining assumes no
obligation and does not undertake any obligation to update or
revise publicly any of the forward-looking statements set out
herein, whether as a result of new information, future events or
otherwise, except to the extent legally required.
Statements of intention
Statements of intention are statements of current intentions
only, which may change as new information becomes available or
circumstances change.
[1] In accordance with ASX Listing Rule 5.21 and Appendix 5A
(the JORC Code) under the supervision of a Competent Person.
[2] Conpared to the 30 August 2022 announcement, Coal Reserves
increased 53%, saleable steelmaking HCC increased 64% and saleable
TC increased by 57%.
[3] Refer to Company announcement of 26 April 2023 Makhado
Project Update.
[4] Refer to Company announcement 30 August 2022 Makhado, Vele
and GSP Updates (Alternative Development Scenarios).
[5] Note that the average annual production for the first five
years of operations is higher at 0.88 Mtpa of HCC and 0.73 Mtpa of
TC as a result of prioritising the mining of higher yielding coal
zones.
[6] ABSA Bank foreign exchange rate consensus long term
forecasts as from June 2023.
[7] Afriforesight coal price consensus long-term forecasts as
from June 2023.
[8] Ibid.
[9] Makhado Coal Reserves as stated in the Company's 30 June
2022 Resources & Reserves Statement, reported in accordance to
JORC Code reporting guidelines.
[10] Makhado Coal Resources as stated in the Company's 30 June
2022 Resources & Reserves Statement, reported in accordance to
JORC Code reporting guidelines, Annual report 22 September
2022.
[11] HCC64 index trades at an average 10% discount to the
premium HCC price.
[12] Sales price adjustments include transport and port
logistics charges.
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END
TSTURRAROWUNOAR
(END) Dow Jones Newswires
June 30, 2023 07:15 ET (11:15 GMT)
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