Phase 2 of ASX-, Aim- and JSE-listed MC Mining’s Makhado hard coking and thermal coal project will be developed according to the 2017 Makhado ‘Lite’ project plan, the emerging coal miner confirmed on Wednesday.
The announcement follows after MC Mining’s board earlier this month approved the phased development of the company’s flagship project, which will result in the start of mining operations in the west pit.
The Makhado ‘Lite’ project plan was announced in October 2017, with the revision entailing production of four-million tonnes a year of run-of-mine (RoM) coal starting in the east and central pits and included the construction of the Makhado project processing plant and related infrastructure.
Construction of Phase 1 is set to start in the west pit in the third quarter of this year, and will produce three-million tonnes a year of RoM coal, while Phase 2, with an anticipated development start date of about 2022, will generate an estimated four-million tonnes a year of RoM coal.
CEO David Brown on Wednesday said the development of the first phase would entail the construction of the west pit, modification of the existing Vele processing plant and the use of road and rail infrastructure previously tested. He added that this approach would reduce the capital requirements and the period for delivery of saleable coal to market, moderating execution risk.
The Phase 1 composite funding plan, announced earlier this month, requires MC Mining to raise about $50-million, made up of new debt of $20-million and additional equity funding of $30-million.
MC Mining is currently in discussion with a potential debt provider for about $20-million, and expects material terms and conditions to be approved by the debt provider’s credit committee during the second quarter.
Fundraising elements are expected to be completed during the third quarter, with construction of Phase 1 to start thereafter.
The debt, together with the new equity, will be used to develop Makhado Phase 1, and settle the existing loan from the Industrial Development Corporation of South Africa.