Dual-listed coal miner MC Mining achieved a 5% improvement on run-of-mine coal production from the Uitkomst metallurgical and thermal coal mine, in South Africa’s KwaZulu-Natal province, in the quarter ended September 30.

Output from the mine came to 126 053 t for the quarter, compared with the 120 260 t produced in the third quarter of 2021.

MC Mining sold 42 686 t of coal from its 70%-owned Uitkomst colliery in the quarter under review, comprising 39 730 t of high-grade thermal coal and 2 956 t of lower-grade middlings coal.

This compares with coal sales of 70 545 t in the prior comparable quarter, of which 64 673 t had been high-grade thermal coal.

Of the 42 686 t of coal sales in the latest quarter, 25 865 t were exported, with a further 42 115 t at the port at the end of the quarter, ready for export in October.

MC Mining CEO and MD Godfrey Gomwe says the company has made significant progress in securing access to export markets for coal from the Uitkomst mine.

Revenue per tonne increased to $125/t in the reporting quarter, against $108/t in the prior corresponding quarter.

The company’s available cash and facilities amounted to $2.2-million at the end of the quarter. 

Gomwe explains that the increase in international thermal coal prices this year has led to MC Mining assessing alternative coal marketing strategies for Uitkomst and it, subsequently, concluded a six-month marketing agreement with Overlooked, an operator of three coal mines in Mpumalanga.

The agreement will see the export of at least 20 000 t of coal, grading 6 000 k/cal, from the Uitkomst mine on a monthly basis, providing access to higher-priced international thermal coal markets.

Gomwe comments that the six-month marketing agreement signed with Overlooked ensures the Uitkomst colliery is in a position to benefit from elevated international thermal coal prices, following Russia’s invasion of Ukraine and the global energy shortage that ensued.

“We recorded our first shipment during August and had significant stockpiles at port at the end of the quarter. Pleasingly, this coal was exported during October,” he adds.

Meanwhile, mining consultancy Minxcon completed a study to assess the potential alternative development scenarios for MC Mining’s Makhado hard coking coal project, in the three months under review.

The consultancy aims to optimise the project’s capital expenditure and reduce operational costs, compared with the base case scenario stated in the project’s bankable feasibility study, which was released in April this year.

The board has since approved the construction of a two-million-tonne-a-year processing plant for Makhado, subject to funding.

Minxcon has also assessed the potential advantages of additional build, own, operate and transfer (BOOT) funding for elements of the Makhado coal processing plant.

The consultancy finds that the construction of  a processing plant materially reduces the colliery’s operational costs, by removing the need to transport the crushed and screened run-of-mine coal 134 km to the company’s Vele plant.

Moreover, MC Mining’s A$40-million rights issue undertaken at the end of September has secured the cornerstone funding required for building the Makhado project, and confirms shareholder support for the project.

The rights issue, once concluded, also satisfies a key condition for the drawdown of a new Industrial Development Corporation facility that MC Mining has in the pipeline.

The company is progressing initiatives to secure the balance of the funding, including additional BOOT funding and composite debt opportunities, as well as potential coal prepayments.

These initiatives are expected to be finalised in the first quarter of next year, which will also be when early works will start at the Makhado project.  

The current estimate for construction capital for Makhado amounts to R1.2-billion, with peak funding of R1.3-billion required under the no-BOOT funding scenario, and R653-million of peak funding required under the BOOT-funded scenario.

Further, MC Mining has advised that its Vele colliery remains on care and maintenance until the company comes to a decision about its reopening, depending on what happens with Makhado and the coal market conditions going forward.