ANNOUNCEMENT 30 July 2021
ACTIVITIES REPORT FOR THE QUARTER ENDED 30 JUNE 2021
FOR
MC Mining Limited (" MC Mining" or the "Company") and its subsidiary companies
HIGHLIGHTS
· Health and safety remain a priority at MC Mining and its subsidiary companies, with one lost-time injury ("LTI") recorded during the quarter (FY2021 Q3: one LTI);
· Measures implemented to restrict the spread of the COVID-19 virus within the MC Mining group workplace are proving successful with only two employees (Q3 FY2021: nine) contracting the virus during the quarter;
· The Industrial Development Corporation of South Africa Limited ("IDC"), on 30 July 2021, confirmed the repayment date for the R160 million ($11.3 million) loan plus accrued interest has been extended to 31 January 2022;
· The terminal drawdown date of the additional R245 million ($17.3 million) IDC term loan for the development of Phase 1 of the Makhado hard coking coal project ("Makhado Project" or "Makhado"), was also extended to 31 January 2022, subject to the IDC re-affirming its financial due diligence;
· Run-of-mine ("ROM") coal production at the high grade Uitkomst metallurgical and thermal coal mine ("Uitkomst Colliery" or "Uitkomst") was 208% higher than the June 2020 quarter (FY2021 Q4: 127,927 tonnes ("t") vs. FY2020 Q4: 41,536t) due to the South African Government-imposed COVID-19 lockdown for a large part of the comparative period.
· 90,858t of coal sales during the quarter (FY 2020 Q4: 19,429t) comprising 84,834t (FY 2020 Q4: 16,707t) of high grade metallurgical and thermal coal and 6,024t (FY 2020 Q4: 2,722t) of lower grade middlings coal;
· The API4 coal price averaged $105/t during the quarter compared to $55/t in Q3 FY2020 and the price is forecast to remain high for the balance of CY2021 as the post-pandemic world economic recovery fuels greater demand for coal ;
· Revenue per tonne increased by 47% to $84.91/t (FY2020 Q4: $57.88/t) due to the much higher API4 coal prices recorded during the quarter ($105/t vs. $55/t);
· Limited activities were undertaken at the Company's Makhado Project, Vele semi-soft coking and thermal coal colliery ("Vele Colliery" or "Vele") and Greater Soutpansberg Projects ("GSP") during the quarter;
· Makhado Project composite debt/equity funding initiatives, including detailed due diligence processes, continued during the quarter; and
· Available cash at quarter-end was $3.2 million ($2.3 million at the end of March 2021) and restricted cash was $0.03 million.
COMMENTARY
A number of parties are in advanced stages of their due diligence for the balance of the funding required to develop the Makhado Project. The Company remains confident that the parties taking part in the process will commit the necessary funds to complete the funding package.
T he IDC reaffirmed their support for the Makhado Project by formally extending the repayment date of the existing R160 million ($11.3 million) loan to 31 January 2022. The IDC also agreed to extend the terminal draw down date for the conditional R245 million ($17.3 million) Makhado Project development term loan facility, to 31 January 2022, subject to the bank confirming its due diligence.
COVID-19
The heal th and safety of the MC Mining group's employees and its contractors is a priority and measures previously implemented to prevent the spread of COVID-19 remain in place. During the quarter, two Uitkomst employees tested positive for the virus (FY2021 Q3: nine positive tests). No positive COVID-19 cases were reported at the Makhado, Vele and GSP projects.
Uitkomst Colliery - Utrecht Coalfields (70% owned)
One LTI was recorded during the quarter (FY2021 Q3: one LTI).
The Uitkomst Colliery generated 127,927t of ROM coal during the quarter, 208% higher than in the comparative Q4 FY2020 period. Production during Q4 FY2020 was limited due to the South African Government-imposed lockdown, introduced to reduce the spread of COVID-19, that resulted in the temporary suspension of activities at the colliery and its customers .
Coal sales to Uitkomst's largest customer returned to normal levels during the quarter, following that customer experiencing equipment breakdowns during Q3 FY2021 and compared to lower sales levels during the comparative COVID-19 lockdown period in Q4 FY2020.
Sales of higher-value coal were therefore significantly above the Q4 2020 comparative period (84,834t vs. 16,707t). The Uitkomst Colliery also sold 6,024t of high ash middlings coal during the quarter (FY2020 Q4: 2,722t). The sales volumes during the quarter were augmented by the sale of coal stockpiles carried over from the preceding period and Uitkomst had 8,753t of saleable coal on hand at the end of the quarter (FY2021 Q3: 20,494t) .
Increased global demand has led to the API4 export coal price recovery from the low prices experienced during the COVID-19 induced economic downturn in CY2020. Average US-dollar denominated API4 prices was 91% higher in the quarter ($105/t vs $55/t) and, as a consequence, Uitkomst's average revenue per tonne increased by 47% to $84.91/t (FY2020 Q4: $57.88/t) with this improvement somewhat offset by the strengthening of the rand against the dollar (FY2021 Q4: R14.14 vs. FY2020 Q4: R17.97 to US$1.00).
Production costs per saleable tonne decreased 45% to $56.74/t (FY2020 Q4: $103.10/t). The significantly higher FY2020 Q4 comparative production costs were due to lower tonnes mined during the COVID-19 lockdown enforced mine closure.
|
Quarter to end-Jun 2021 |
Quarter to end-Jun 2020 |
% ▲ |
Production tonnages |
|
|
|
Uitkomst ROM (t) |
127,927 |
41,536 |
208% |
|
|
|
|
Sales tonnages |
|
|
|
Metallurgical and thermal coal (t) |
84,834 |
16,707 |
408% |
Middlings sales |
6,024 |
2,722 |
121% |
|
90,858 |
19,429 |
368% |
Quarter financial metrics |
|
|
|
Revenue/t ($) |
84.91 |
57.88 |
47% |
Revenue/t (ZAR) |
1,201 |
1,040 |
15% |
Production cost/saleable tonnes ($)^ |
56.74 |
103.10 |
(45%) |
^ costs are all South African Rand based
Makhado Hard Coking Coal Project - Soutpansberg Coalfield (67% owned)
The fully permitted Makhado Project recorded no LTIs (FY2021 Q3: nil) during the quarter.
MC Mining's flagship Makhado Project has very favourable economics and its phased development is expected to deliver positive returns for shareholders. Makhado has a life-of-mine in excess of 46 years and the project would position MC Mining as South Africa's pre-eminent hard coking coal ("HCC") producer.
The IDC has provided longstanding financial support for the development of the Makhado Project and MC Mining has utilised an IDC loan of R160 million ($11.3 million) to progress Makhado to its fully-permitted status and to partially fund the acquisition of the surface rights over the project area. The IDC is also a 6.7% shareholder in MC Mining subsidiary, Baobab Mining & Exploration (Pty) Ltd, the owner of the Makhado Project. The Company regularly interacts with the IDC as well as potential funders and, subsequent to the end of the quarter, the IDC extended the date for repayment of the R160 million loan plus interest, to 31 January 2022. The IDC also agreed to extend the terminal draw down date in respect of the conditional R245 million ($17.3 million) term loan facility for the development of the Makhado Project, to 31 January 2022, subject to the bank confirming its financial due diligence. The Company and IDC are also continuing discussions with the objective of aligning repayment of the IDC facilities with the positive cash flows generated by Makhado.
DRA Projects (SA) (Pty) Ltd ("DRA") completed the initial Makhado Phase 1 capital estimate in October 2019. Given the lapse in time and the known rise in steel prices, the Company contracted DRA to review the Makhado Phase 1 development cost estimate during the quarter. This review was completed and resulted in a revised development cost estimate for Makhado Phase 1 of R650.5 million ($46 million).
Vele Semi-Soft Coking and Thermal Coal Colliery - Limpopo (Tuli) Coalfield (100% owned)
The Vele Colliery remained on care and maintenance during the quarter and no LTIs were recorded during the period (FY2021 Q3: nil). The Vele processing plant is to be refurbished and recommissioned as part of Phase 1 development of the Makhado Project.
Greater Soutpansberg Project (GSP)- Soutpansberg Coalfield (74% owned)
GSP recorded no LTIs (FY2021 Q3: nil) during the quarter and no reportable activities occurred during the period.
Markets
The global economy continued to improve during the quarter, driving global demand for commodities following the spread of COVID-19 during H1 CY2020. This is reflected in the increased demand for South African thermal coal, with average API4 coal prices improving to $105/t, 91 % higher than the $55/t recorded in Q4 FY2020 (FY2021 Q3: $91/t). Demand for HCC also increased during the quarter and average prices were 19% higher than in the comparative period ($134/t vs. $112/t).
Appendix 5B - Quarterly Cash Flow Report
The cash position of the MC Mining group as at 30 June 2021 was $3.2 million. The aggregate amount of payments to related parties and their associates as disclosed at item 6.1 of the June quarter Appendix 5B was $34k, comprising executive director remuneration.
Sam Randazzo
Chief Executive Officer
This announcement has been approved by the Company's Disclosure Committee.
This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
For more information contact: |
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Tony Bevan |
Company Secretary |
Endeavour Corporate Services |
+61 08 9316 9100 |
Company advisors: |
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James Harris / James Dance |
Nominated Adviser |
Strand Hanson Limited
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+44 20 7409 3494 |
Rory Scott |
Broker (AIM) |
Tennyson Securities |
+44 20 7186 9031 |
James Duncan |
Financial PR (South Africa) |
R&A Strategic Communications |
+27 11 880 3924 |
Investec Bank Limited is the nominated JSE Sponsor |
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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.
MC Mining has ensured that the mineral resources quoted are subject to good governance arrangements and internal control. The Company has engaged external independent consultants to update the mineral resource in accordance with the JORC Code 2012 and SAMREC 2016. The units of measure in this report are metric, with Tonnes (t) = 1,000kg. Technical information that requires subsequent calculations to derive subtotals, totals and weighted averages may involve a degree of rounding and consequently introduce an error. Where such errors occur MC Mining does not consider them to be material.
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 and Kalbara | M27/41 | Coolgardie^ | 2.99% |
| |
M27/47 | 2.99% |
| |||
M27/59 | 2.99% |
| |||
| M27/72,27/73 | 2.99% |
| ||
| M27/114 | 2.99% |
| ||
| M27/181 | 7.24% |
| ||
| M27/196 | 2.99% |
| ||
| M27/414,27/415 | 2.99% |
| ||
| P27/1826-1829 |
| 2.99% |
| |
| P27/1830-1842 | 2.99% |
| ||
| P27/1887 | 2.99% |
| ||
Abbotshall Royalty | ML63/409,410 | Norseman^ | Royalty |
| |
Kookynie Royalty | ML40/061 | Leonora^ | Royalty |
| |
ML40/135,136 |
| Royalty |
| ||
Makhado Project | Fripp 645 MS | Limpopo~ | 69%# |
| |
Lukin 643 MS |
| 69%# |
| ||
| Mutamba 668 MS |
| 69%# |
| |
| Salaita 188 MT |
| 69%# |
| |
| Tanga 849 MS |
| 69%# |
| |
| Daru 889 MS |
| 69%# |
| |
| Windhoek 900 MS |
| 69%# |
| |
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 prospects | Portion 3 (of 2) of Kweekspruit No. 22 | KwaZulu-Natal~ | 70% |
| |
Portion 8 (of 1) of Kweekspruit No. 22 | 70% |
| |||
Remainder of Portion 1 of Uitkomst No. 95 |
| 70% |
| ||
| Portion 5 (of 2) of Uitkomst No. 95 |
| 70% |
| |
| Remainder Portion1 of Vaalbank No. 103 |
| 70% |
| |
| Portion 4 (of 1) of Vaalbank No. 103 |
| 70% |
| |
| Portion 5 (of 1) of Vaalbank No. 103 |
| 70% |
| |
| Remainder of Portion 1 of Rustverwacht No. 151 |
| 70% |
| |
| Remainder of Portion 2 of Rustverwacht No. 151 |
| 70% |
| |
| Remainder of Portion 3 (of 1) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 4 (of 1) Rustverwacht No.151 |
| 70% |
| |
| Portion 5 (of 1) Rustverwacht No. 151 |
| 70% |
| |
| Remainder of Portion 6 (of 1) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 7 (of 1) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 8 (of 2) of Rustverwacht No. 151 |
| 70% |
| |
| Remainder of Portion 9 (of 2) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 11 (of 6) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 12 (of 9) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 13 (of 2) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 14 (of 2) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 15 (of 3) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 16 (of 3) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 17 (of 2) of Rustverwacht No. 151 |
| 70% |
| |
| Portion 18 (of 3) of Waterval No. 157 |
| 70% |
| |
| Remainder of Portion 1 of Klipspruit No. 178 |
| 70% |
| |
| Remainder of Portion 4 of Klipspruit No. 178 |
| 70% |
| |
| Remainder of Portion 5 of Klipspruit No. 178 |
| 70% |
| |
| Portion 6 of Klipspruit No. 178 |
| 70% |
| |
| Portion 7 (of 1) of Klipspruit No. 178 |
| 70% |
| |
| Portion 8 (of 1 )of Klipspruit No. 178 |
| 70% |
| |
| Portion 9 of Klipspruit No. 178 |
| 70% |
| |
| Remainder of Portion 10 (of 5) of Klipspruit No. 178 |
| 70% |
| |
| Portion 11 (of 5) of Klipspruit No. 178 |
| 70% |
| |
| Portion 13 (of 4) of Klipspruit No. 178 |
| 70% |
| |
| Remainder of Portion 14 of Klipspruit No. 178 |
| 70% |
| |
| Portion 16 (of 14) of Klipspruit No. 178 |
| 70% |
| |
| Portion 18 of Klipspruit No. 178 |
| 70% |
| |
| Portion 23 of Klipspruit No. 178 |
| 70% |
| |
| Remainder of Portion 1 of Jackalsdraai No. 299 |
| 70% |
| |
| Remainder of Jericho B No. 400 |
| 70% |
| |
| Portion 1 of Jericho B No. 400 |
| 70% |
| |
| Portion 2 of Jericho B No. 400 |
| 70% |
| |
| Portion 3 of Jericho B No. 400 |
| 70% |
| |
| Remainder of Jericho C No. 413 |
| 70% |
| |
| Portion 1 of Jericho C No. 413 |
| 70% |
| |
| Remainder of Portion 1 of Jericho A No. 414 |
| 70% |
| |
| Remainder of Portion 2 (of 1) of Jericho A No. 414 |
| 70% |
| |
| Portion 3 (of 1) of Jericho A No. 414 |
| 70% |
| |
| Portion 4 (of 1) of Jericho A No. 414 |
| 70% |
| |
| Portion 5 (of 2) of Jericho A No. 414 |
| 70% |
| |
| Portion 6 (of 1) of Jericho A No. 414 |
| 70% |
| |
| Margin No. 420 |
| 70% |
| |
Vele Colliery and prospects | Portions of Overvlakte 125 MS (Remaining Extent, 3, 4, 5, 6, 13, 14) | Limpopo~ | 100% |
| |
Bergen Op Zoom 124 MS |
| 100% |
| ||
Semple 155 MS |
| 100% |
| ||
| Voorspoed 836 MS |
| 100% |
| |
| Alyth 837 MS |
| 100% |
| |
Tshikunda | Certain portions of Unsurveyed State Land known as Mutale | Limpopo~ | 60% |
| |
* 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