Coal miner MC Mining is making progress to secure funding for its Makhado project.
The Industrial Development Corporation (IDC) reaffirmed its support for South African coal miner MC Mining’s Makhado project by formally extending the repayment date of the existing R160-million loan to January 31, 2022.
The IDC also agreed to extend the terminal drawdown date for the conditional R245-million Makhado project development term loan facility, to January 31, 2022, subject to confirming the miner’s due diligence.
Should MC Mining not repay the loan by January 31 next year, and further extensions are not granted, the existing IDC facility may be converted into equity of MC Mining or its subsidiary, Baobab Mining and Exploration.
In a statement on October 29, MC Mining said a number of parties were continuing their due diligence review for providing the balance of the funding required by the company to develop Makhado.
MC Mining remains confident that the parties taking part in the process will commit the necessary funds to complete the funding package, anticipated to be finalised during the first quarter of 2022, with construction to start in the following quarter.
MC Mining is also progressing several alternative strategies to raise additional funding including, but not limited to, the issue of new equity for cash in MC Mining or subsidiary companies, or further debt funding.
While the aforementioned funding discussions are expected to be subject to successful negotiations, MC Mining warned that there could be no guarantee that any such discussions would be concluded, or as to the timing or terms of such funding.
During the quarter ended September 30, MC Mining undertook limited activities at Makhado hard coking coal project, Vele semi-soft coking and thermal coal colliery and the Greater Soutpansberg Projects.
The Makhado project composite debt/equity funding initiatives, including detailed due diligence processes by potential funders, continued during the quarter; and the available cash at quarter-end was $3.5-million and restricted cash was $300 000.
Operations at the Uitkomst colliery, meanwhile, were suspended for four days in July owing to civil unrest in KwaZulu-Natal.
In spite of this, the run-of-mine (RoM) coal production at Uitkomst was 12% lower than that of the September 2020 quarter, mainly owing to the shutdown caused by the civil unrest.
Coal sales amounted to 70 545 t during the quarter, comprising 67 673 t of high-grade metallurgical and thermal coal and 5 872 t of lower-grade middlings coal.
Revenue per tonne increased by 86% to $108/t owing to the much higher API4 coal prices recorded during the quarter.
Additionally, a prepayment facility of R29.7-million was agreed with Uitkomst’s largest customer for 16 500 t of coal, to be delivered at the rate of 2 750 t per month over six months from September 2021 to February 2022.
A Covid-19 vaccination programme was also implemented at Uitkomst during the quarter, resulting in over 71% of Uitkomst’s employees having been vaccinated to date.