TIDMMCM
RNS Number : 8607R
MC Mining Limited
31 October 2023
ANNOUNCEMENT 31 October 2023
ACTIVITIES REPORT FOR THE QUARTERED 30 SEPTEMBER 2023
FOR
MC Mining Limited ( MC Mining or the Company)
and its subsidiary companies
HIGHLIGHTS
Operations
-- Health and safety remains a priority and we continue to make
progress, against the background of the goal of zero harm, with no
lost-time injuries (LTIs) recorded during the quarter (FY2023 Q4:
two LTIs);
-- Production at the Uitkomst steelmaking and thermal coal mine
(Uitkomst Colliery or Uitkomst) increased following the
implementation of a turnaround plan in June 2023 and run-of-mine
(ROM) coal production was 10% higher than the September 2022
quarter at 139,192 tonnes (t) (FY2023 Q1: 126,053t);
-- Uitkomst sold 100,449t of coal during the quarter (FY2023 Q1:
42,686t), comprising 100,074t (FY2023 Q1: 39,730t) of high-grade
domestic coal sales and 375t (FY2023 Q1: 2,956t) of lower grade
middlings coal;
-- Following expiry of the export marketing agreement at the end
of June 2023, Uitkomst had 34,919t (FY2023 Q1: 24,312t) of
high-grade coal at the colliery and nil t (FY2023 Q1: 42,115t) at
port at the end of the quarter;
-- Steady progress during the quarter on critical early works
activities at the Makhado steelmaking hard coking coal project
(Makhado Project or Makhado) and advancing the detailed design of
the coal handling and processing plant (CHPP) and related
infrastructure;
-- The managed tender processes to select the mining contractor
as well as the operating and maintenance contractors for the
Makhado CHPP and the laboratory continued during the quarter;
and
-- Ramp-up of mining and processing at the outsourced Vele
Aluwani Colliery (Vele Colliery or Vele) following the
recommissioning of the mine in December 2022 and the outsource
agent delivered 71,580 t (FY2023 Q1: nil t) of thermal coal during
the quarter .
Corporate
-- Thermal coal prices continued to decline, averaging US $109/t
in the quarter compared to US$115/t in Q4 FY2023 and US$325/t in Q1
of FY2023. Premium steelmaking hard coking coal (HCC) prices
remained elevated, averaging US$258/t in the quarter (FY2023 Q1:
US$250/t); and
-- Available cash and facilities of US$5.1 million (FY2023 Q4:
net cash balance of US$8.8 million).
Events subsequent to 30 September 2023
-- Positive engagement with the I ndustrial Development
Corporation of South Africa Limited and approval received to e
xtend the repayment date for the R160 million loan (US$8.5
million), plus interest thereon, to 30 September 2024.
Godfrey Gomwe, Managing Director & Chief Executive Officer,
commented :
"The implementation of turnaround plan at the Uitkomst Colliery
during June 2023 has yielded very pleasing results and ROM coal
production exceeded the comparative period, despite the increased
incidents of electricity blackouts implemented by Eskom, the state
power utility, compared to Q1 FY2023. Production at the underground
colliery was impacted by the extended travel time to the mining
areas and the optimisation initiative , which includes a change in
the shift system, resulted in increased mining time, yielding
higher volumes of coal. Uitkomst continues to assess alternative
international and domestic coal marketing strategies for the
colliery's premium product.
The Company progressed the Makhado Project during the quarter.
This includes advancing the early works, primarily, to ensure that
the site is secure, and starting the construction of a bridge
across the Mutamba river along with water infrastructure for the
CHPP. We also continued with the detailed design of the CHPP and
progressed the managed tender processes to select the outsourced
mining, plant and laboratory operators. This resulted in the
shortlisting of preferred contractors and we anticipate making the
relevant appointments in Q1 CY2024.
The ramp-up of operations at the outsourced Vele Colliery
continued during the quarter and the contractor is expected to be
at full production during Q4 CY2023."
DETAILED QUARTERLY OPERATIONS REPORTS
Uitkomst Colliery - Utrecht Coalfields (84% owned)
No LTIs were recorded during the quarter (FY2023 Q4: one LTI)
with the continued focus on leading indicators delivering safety
improvements.
Uitkomst produced 139,192t of ROM coal during the quarter
(FY2023 Q1: 126,053t). This follows the implementation of a
turnaround plan at the colliery in June 2023. This optimisation
initiative includes a revised underground operating shift system
which is designed to increase mining time, yielding additional ROM
coal production. This has resulted in higher volumes of saleable
coal and lower unit production costs. Uitkomst achieved a 10%
improvement in ROM coal production despite impact of daily
electricity blackouts. Uitkomst has access to back-up diesel
generators but these are only sufficient for underground mining
operations; additionally the switch from Eskom to internally
generated power affects both underground and surface operations and
adds to mining costs.
Uitkomst sold 100,074t (FY2023 Q1: 39,730t) of high-grade pea
and duff-sized coal to domestic customers during the three months
while the comparative period included the export of 25,856t of
coal. The switch to domestic sales is due to lower API4 prices in
CY2023 with an average price of US$109/t during the quarter, 66%
lower than FY2023 Q1 (US$325/t). The fixed-price contract for the
sale of high-ash, lower value middlings coal expired during the
previous quarter and Uitkomst only sold 375t (FY2023 Q1: 2,956t)
during the three months. The colliery had 34,919t (FY2023 Q1:
24,312t; 42,115t at port) of high-grade coal on site at the end of
the quarter and the Company continues to assess potential
alternative coal marketing opportunities.
The revenue per tonne declined by 31% compared to Q1 FY2023
primarily due to sales into the domestic market, whereas API4 coal
prices were elevated in Q1 FY2023 in which Uitkomst exported
25,856t. The higher coal sales volumes and weaker exchange rate
contributed to the 28% decline in production costs per saleable
tonne (FY2024 Q1: US$59/t vs. FY2023 Q1: US$82/t).
Quarter to end-Sep 2023 Quarter to end-Sep 2022 %
Production volumes
Uitkomst ROM (t) 139,192 126,053 10%
Inventory volumes
High quality duff and peas at site (t) 34,919 24,312 44%
High quality duff and peas at port (t) - 42,115 (100%)
34,919 66,427 (47%)
Sales tonnages
Domestic high-quality duff and peas (t) 100,074 39,730 >100%
Middlings sales (t) 375 2,956 (87%)
100,449 42,686 >100%
Quarter financial metrics
Net revenue/t (US$) 86 125 (31%)
Net revenue/t (ZAR) 1,611 2,124 (24%)
Production cost/saleable tonne (US$)^ 59 82 (28%)
----------------------------------------- ------------------------- ------------------------- --------
^ costs are all South African Rand (ZAR) based
Makhado Hard Coking Coal Project - Soutpansberg Coalfield (67%
owned)
The development of the Company's flagship fully-licensed and
shovel-ready Makhado Project is expected to position MC Mining as
South Africa's pre-eminent steelmaking HCC producer. Makhado
recorded no LTIs (FY2023 Q4: nil) during the quarter.
Early works
The Company continued to progress the critical Makhado early
works during the quarter, including:
-- Construction of the main access road and the preparatory
earthworks for a bridge across the Mutamba river;
-- Commencement of the construction of the foundations for the
CHPP bulk water supply reservoirs;
-- Continuation of work on the detailed design, procurement and
construction of the power supply overhead transmission line - a
critical path activity;
-- Refurbishment of onsite accommodation to house project construction crews; and
-- Securing the site including significant progress with erection of fencing.
Tender processes
The Makhado Project will be contractor-operated. First coal
production is expected 18 months from commencement of construction,
which is expected during H1 CY2024. The Company advanced the open
tender processes to select the outsourced mining contractor, a CHPP
operating contractor and the analytical laboratory operator during
the quarter. This resulted in the short-listing of preferred
contractors. The selection of the mining contractor is at an
advanced stage and the Company anticipates concluding the tender
processes in H1 CY2024.
Makhado Project Funding
The Company continued with the Makhado Project composite funding
initiatives during the quarter, including progressing the detailed
designs for the CHPP and related infrastructure in preparation for
procurement. This information is required by potential funders and
MC Mining anticipates that the funding will be concluded in H1
CY2024, with construction commencing soon thereafter. The various
initiatives being negotiated include, amongst others, funding
arrangements through build, own, operate, transfer (BOOT); senior
debt and debt/equity instruments; coal prepayments; and
engineering, procurement and construction (EPC) contracts.
Vele Aluwani Semi-Soft Coking and Thermal Coal Colliery -
Limpopo (Tuli) Coalfield (100% owned)
Vele recorded no LTIs (FY2023 Q4: one LTI) during the
quarter.
The mining and processing operations at the opencast Vele
Colliery were outsourced to Hlalethembeni Outsourcing Services
(Pty) Ltd (HOS) and recommissioned in late December 2022. HOS is
responsible for all mining and processing costs and the Company
remains responsible for the colliery's regulatory compliance,
rehabilitation guarantees, relationships with authorities and
communities as well as the supply of electricity and water. HOS
pays a fee of ZAR200/t of coal sold if the monthly average API4
price is higher than $120/t . The contractor delivered 71,580t
(FY2023 Q1: nil t) of thermal coal during the quarter. Ramp-up to
full production is expected in Q4 CY2023 with HOS targeting monthly
production of 60,000t of saleable thermal coal from Vele.
Greater Soutpansberg Project (GSP) - Soutpansberg Coalfield (74%
owned)
The Greater Soutpansberg Projects recorded no LTIs (FY2023 Q1:
nil) during the quarter and no reportable activities occurred
during the period.
Appendix 5B - Quarterly Cash Flow Report
The Company's available cash balance and facilities as at 30
September 2023 was US$5.1 million. The aggregate amount of payments
to related parties and their associates, as disclosed as item 6.1
of the June 2023 quarter Appendix 5B, was US$149k, comprising
executive and non-executive director remuneration.
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:
Tony Bevan Company Secretary Endeavour Corporate Services +61 8 9316 9100
Company advisers:
Richard Johnson /
Rob Patrick Nominated Adviser Strand Hanson Limited +44 20 7409 3494
Rory Scott Broker (AIM) Tennyson Securities +44 20 7186 9031
Marion Brower Financial PR (South Africa) R&A Strategic Communications +27 11 880 3924
BSM Sponsors Proprietary 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 .
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.
Glossary
Term Definition
BOOT Build, own, operate, transfer
CHPP Coal handling & processing plant
GSP Greater Soutpansberg Projects
HCC Hard coking coal
HOS Hlalethembeni Outsource Services (Pty) Ltd
LTI Lost time injury
Makhado Project/ Makhado Makhado steelmaking hard coking coal project
MC Mining/ the Company MC Mining Limited
ROM Run of mine
t tonnes
Uitkomst Colliery/ Uitkomst Uitkomst metallurgical and thermal coal mine
Vele Colliery/Vele Vele Aluwani Colliery
Tenements held by MC Mining and its Controlled Entities
Project Name Tenement Number Location Interest Change during quarter
---------------------------- ---------------------------------- ---------------- ---------- ----------------------
Chapudi Project* Albert 686 MS Limpopo 74%
Bergwater 712 MS 74%
Remaining Extent and Portion 2 of
Bergwater 697 MS 74%
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of
Bluebell 480 MS 74%
Remaining Extent & Portion 1 of
Bushy Rise 702 MS 74%
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 3 &
4 of Coniston 699 MS 74%
Driehoek 631 MS 74%
Remaining Extent of Dorps-rivier
696 MS 74%
Enfield 512 MS (consolidation of
Remaining Extent of Enfield 474
MS, Brosdoorn 682 MS & Remaining
Extent of Grootvlei 684 MS) 74%
Remaining Extent and Portion 1 of 74%
Grootboomen 476 MS 74%
Grootvlei 684 MS 74%
Kalkbult 709 MS 74%
Remaining Extent, Remaining
Extent of Portion 2, Remaining
Extent of Portion 3, Portions 1,
4, 5, 6, 7 & 8 of Kliprivier 692
MS 74%
Remaining Extent of Koodoobult
664 MS 74%
Koschade 657 MS (Was Mapani Kop
656 MS) 74%
Malapchani 659 MS 74%
Mapani Ridge 660 MS 74%
Melrose 469 MS 74%
Middelfontein 683 MS 74%
Mountain View 706 MS 74%
M'tamba Vlei 654 MS 74%
Remaining Extent & Portion 1 of
Pienaar 635 MS 74%
Remaining Extent & Portion 1 of
Prince's Hill 704 MS 74%
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Remaining Extent & Portion 1 of
Ridge End 662 MS 74%
Remaining Extent & Portion 1 of
Rochdale 700 MS 74%
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 MS 74%
Sandstone Edge 658 MS 74%
Remaining Extent of Portions 2 &
3 of Sterkstroom 689 MS 74%
Sutherland 693 MS 74%
Remaining Extent & Portion 1 of
Varkfontein 671 MS 74%
Remaining Extent, Portion 2,
Remaining Extent of Portion 1 of
Vastval 477 MS 74%
Vleifontein 691 MS 74%
Ptn 3, 4, 5 & 6 of Waterpoort 695
MS 74%
Wildebeesthoek 661 MS 74%
Woodlands 701 MS 74%
---------------------------------- --------------------------------------------- ---------- ----------------------
Kanowna West & Kalbara M27/41 Coolgardie^ Royalty<>
----------------
M27/47 Royalty<>
----------------
M27/59 Royalty<>
M27/72,27/73 Royalty<>
M27/114 Royalty<>
M27/196 Royalty<>
M27/181 5.99%
M27/414,27/415 Royalty<>
P27/1826-1829 Royalty<>
P27/1830-1842 Royalty<>
P27/1887 Royalty<>
---------------------------- ---------------------------------- ---------------- ---------- ----------------------
Abbotshall Royalty ML63/409,410 Norseman^ Royalty
---------------------------- ---------------------------------- ---------------- ---------- ----------------------
Kookynie Royalty ML40/061 Leonora^ Royalty
----------------------------
ML40/135,136 Royalty
---------------------------- ---------------------------------- ---------------- ---------- ----------------------
Makhado Project Fripp 645 MS Limpopo 67%(#)
Lukin 643 MS 67%(#)
Mutamba 668 MS 67%(#)
Salaita 188 MT 67%(#)
Tanga 849 MS 67%(#)
Daru 889 MS 67%(#)
Windhoek 900 MS 67%(#)
Generaal Project* Beck 568 MS Limpopo 74%
Bekaf 650 MS 74%
Remaining Extent & Portion 1 of
Boas 642 MS- 74%
Chase 576 MS 74%
Coen Britz 646 MS 74%
Fanie 578 MS 74%
Portions 1, 2 and Remaining
Extent of Generaal 587 MS 74%
Joffre 584 MS 74%
Juliana 647 MS 74%
Kleinenberg 636 MS 74%
Remaining Extent of Maseri Pan
520 MS 74%
Remaining Extent and Portion 2 of
Mount Stuart 153 MT 100%
Nakab 184 MT 100%
Phantom 640 MS 74%
Riet 182 MT 100%
Rissik 637 MS 100%
Schuitdrift 179 MT 100%
Septimus 156 MT 100%
Solitude 111 MT 74%
Stayt 183 MT 100%
Remaining Extent & Portion 1 of
Terblanche 155 MT 100%
Van Deventer 641 MS 74%
Wildgoose 577 MS 74%
---------------------------------- --------------------------------------------- ---------- ----------------------
Mopane Project* Ancaster 501 MS Limpopo 100%
Banff 502 MS 74%
Bierman 599 MS 74%
Cavan 508 MS 100%
Cohen 591 MS 100%
Remaining Extent, Portions 1 & 2
of Delft 499 MS 74%
Dreyer 526 MS 74%
Remaining Extent of Du Toit 563
MS 74%
Faure 562 MS 74%
Remaining Extent and Portion 1 of
Goosen 530 MS 74%
Hermanus 533 MS 74%
Jutland 536 MS 100%
Krige 495 MS 74%
Mons 557 MS 100%
Remaining Extent of Otto 560 MS
(Now Honeymoon) 74%
Remaining Extent & Portion 1 of
Pretorius 531 MS 74%
Schalk 542 MS 74%
Stubbs 558 MS 100%
Ursa Minor 551 MS 74%
Van Heerden 519 MS 74%
Portions 1, 3, 4, 5, 6, 7, 8, 9,
Remaining Extent of Portion 10,
Portions 13, 14, 15, 16,
17, 18, 19, 20, 21, 22, 23, 24,
26, 27, 29, 30, 35, 36, 37, 38,
39, 40, 41, 44, 45, 46, 48,
49, 50, 51, 52 & 54 of Vera 815
MS 74%
Remaining Extent of Verdun 535 MS 74%
Voorburg 503 MS 100%
Scheveningen 500 MS 74%
Uitkomst Colliery and Portion 3 (of 2) of Kweekspruit
prospects No. 22 KwaZulu-Natal 84%
Portion 8 (of 1) of Kweekspruit
No. 22 84%
Remainder of Portion 1 of
Uitkomst No. 95 84%
Portion 5 (of 2) of Uitkomst No.
95 84%
Remainder Portion1 of Vaalbank
No. 103 84%
Portion 4 (of 1) of Vaalbank No.
103 84%
Portion 5 (of 1) of Vaalbank No.
103 84%
Remainder of Portion 1 of
Rustverwacht No. 151 84%
Remainder of Portion 2 of
Rustverwacht No. 151 84%
Remainder of Portion 3 (of 1) of
Rustverwacht No. 151 84%
Portion 4 (of 1) Rustverwacht
No.151 84%
Portion 5 (of 1) Rustverwacht No.
151 84%
Remainder of Portion 6 (of 1) of
Rustverwacht No. 151 84%
Portion 7 (of 1) of Rustverwacht
No. 151 84%
Portion 8 (of 2) of Rustverwacht
No. 151 84%
Remainder of Portion 9 (of 2) of
Rustverwacht No. 151 84%
Portion 11 (of 6) of Rustverwacht
No. 151 84%
Portion 12 (of 9) of Rustverwacht
No. 151 84%
Portion 13 (of 2) of Rustverwacht
No. 151 84%
Portion 14 (of 2) of Rustverwacht
No. 151 84%
Portion 15 (of 3) of Rustverwacht
No. 151 84%
Portion 16 (of 3) of Rustverwacht
No. 151 84%
Portion 17 (of 2) of Rustverwacht
No. 151 84%
Portion 18 (of 3) of Waterval No.
157 84%
Remainder of Portion 1 of
Klipspruit No. 178 84%
Remainder of Portion 4 of
Klipspruit No. 178 84%
Remainder of Portion 5 of
Klipspruit No. 178 84%
Portion 6 of Klipspruit No. 178 84%
Portion 7 (of 1) of Klipspruit
No. 178 84%
Portion 8 (of 1 )of Klipspruit
No. 178 84%
Portion 9 of Klipspruit No. 178 84%
Remainder of Portion 10 (of 5) of
Klipspruit No. 178 84%
Portion 11 (of 5) of Klipspruit
No. 178 84%
Portion 13 (of 4) of Klipspruit
No. 178 84%
Remainder of Portion 14 of
Klipspruit No. 178 84%
Portion 16 (of 14) of Klipspruit
No. 178 84%
Portion 18 of Klipspruit No. 178 84%
Portion 23 of Klipspruit No. 178 84%
Remainder of Portion 1 of
Jackalsdraai No. 299 84%
Remainder of Jericho B No. 400 84%
Portion 1 of Jericho B No. 400 84%
Portion 2 of Jericho B No. 400 84%
Portion 3 of Jericho B No. 400 84%
Remainder of Jericho C No. 413 84%
Portion 1 of Jericho C No. 413 84%
Remainder of Portion 1 of Jericho
A No. 414 84%
Remainder of Portion 2 (of 1) of
Jericho A No. 414 84%
Portion 3 (of 1) of Jericho A No.
414 84%
Portion 4 (of 1) of Jericho A No.
414 84%
Portion 5 (of 2) of Jericho A No.
414 84%
Portion 6 (of 1) of Jericho A No.
414 84%
Margin No. 420 84%
Portions of Overvlakte 125 MS
Vele Colliery and (Remaining Extent, 3, 4, 5, 6,
prospects 13, 14) Limpopo 100%
Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
---------------------------------- --------------------------------------------- ---------- ----------------------
* Form part of the Greater Soutpansberg Projects
Tenement located in the Republic of South Africa
^ Tenement located in Australia
(#) MC Mining's interest will reduce to 67% on completion of the
26% Broad Based Black Economic Empowerment (BBBEE) transaction
<> net smelter royalty of 0.5%
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October 31, 2023 05:25 ET (09:25 GMT)
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