JOHANNESBURG (miningweekly.com) – Equipment availability challenges resulted in an 18% quarter-on-quarter decrease in production at MC Mining’s Uitkomst metallurgical and thermal coal colliery to 115 750 t for the three months ended March 31.

“The contract miner experienced equipment availability challenges during the quarter, resulting in reduced run-of-mine (RoM) production and, as a result, the company is in discussions with the mining contractor to resolve these issues,” CEO David Brown said in a statement on Thursday.

He noted that the contract with the supplier expired during the quarter and replacement sources are being sought.

The reduced availability of third-party RoM coal and higher inventory levels at quarter-end resulted in overall sales for the three months declining by 51%, comprising a 33% reduction in sales of RoM coal produced at Uitkomst and a 41 548 t reduction in sales emanating from bought RoM coal.

Meanwhile, sales volumes of higher-margin Uitkomst RoM coal were adversely affected by rain in March, preventing trucks from accessing the site.

Mining and production costs were largely in line with the previous quarter, with unit production costs increasing owing to the 78% decline in sales of bought RoM coal for processing and blending.

Uitkomst-sized coal stock levels at the end of March were 5 420 t higher than in December 2017, owing to rain affecting the number of trucks that could access site at the end of the period, delaying sales.

However, Uitkomst was cash generative for the three months as detailed in the positive operating cash movement, while the stockpiled coal will be sold during the June quarter.

Despite revenue being adversely affected by a 12% stronger rand against the dollar during the quarter, the relative revenue per tonne improved owing to the change in sales mix.

To meet the requirements of the South African Mining Charter, the company concluded the process of selling an additional 21% interest in Uitkomst to black economic empowerment shareholders on a vendor financed basis.

“The significant political changes that occurred in South Africa during December resulted in a much stronger rand compared with the first half of the 2018 financial year. The company is confident that the political focus on ensuring regulatory certainty should lead to increased capital investment, particularly in the mining sector,” he said.