TIDMMCM
RNS Number : 2232W
MC Mining Limited
22 April 2021
ANNOUNCEMENT 22 April 2021
ACTIVITIES REPORT FOR THE QUARTERED 31 MARCH 2021
FOR
MC Mining Limited (" MC MINING" OR THE "COMPANY") and its South
African based subsidiary companies
HIGHLIGHTS
-- Health and safety remains a priority at the high-grade
Uitkomst metallurgical and thermal coal mine ("Uitkomst Colliery"
or "Uitkomst"), with one lost-time injury ("LTI") recorded during
the quarter (FY2021 Q2: one LTI);
-- Nine employees contracted the Covid-19 virus during the
quarter, however, measures implemented to restrict the spread of
the virus within the MC Mining group workplace are proving
successful, with no new cases reported since the quarter-end;
-- Run-of-mine ("ROM") coal production at Uitkomst was 9% lower
than the comparative March 2020 quarter (FY2021 Q3: 115,944 tonnes
("t") vs. FY2020 Q3: 127,122t) primarily due to:
i) a three-day union led blockade at the Uitkomst Colliery in February 2021;
ii) displays of cold and flu symptoms resulting in higher than
usual employee absenteeism;
iii) having to work through a non-productive dyke incursion.
-- Uitkomst's coal sales declined 15% to 62,301t (FY 2020 Q3:
72,942t) due to its main customer's six-week repair and maintenance
shutdown of its steel making plant;
-- The API4 coal price averaged $91/t during the quarter, 15%
above the comparative Q3 FY2020 period ($79/t) and the price is
forecast to remain high as the post pandemic world economic
recovery fuels greater demand for coal ;
-- Revenue per tonne increased by 4% to $71.76/t (FY2020 Q3:
$69.33/t), as the higher API4 price recorded during the quarter was
offset by a change in sales mix, with sales of high value coal
being proportionately lower compared to Q3 FY2020;
-- Production volumes returned to normal by the end of the
quarter and sales volumes are expected to normalise during the June
quarter;
-- Limited activities were undertaken at the Company's Makhado
hard coking coal project ("Makhado Project" or "Makhado"), Vele
semi-soft coking and thermal coal colliery ("Vele Colliery" or
"Vele") and Greater Soutpansberg Projects ("GSP") during the
quarter;
-- Industrial Development Corporation of South Africa Limited
("IDC") extended the repayment date for the R160 million ($11.1
million) outstanding loan plus accrued interest, to 31 July
2021;
-- The terminal draw down date of the additional R245 million
($17.0 million) IDC term loan for the development of Phase 1 of the
Makhado Project, was extended to 31 July 2021, subject to the IDC
re-affirming its financial due diligence;
-- Composite debt/equity funding initiatives for the Makhado
Project continued during the quarter;
-- The South African Department of Mineral Resources &
Energy ("DMRE") granted the mining right for the 74%-owned Mopane
coking and thermal coal project ("Mopane Project"), one of the
three projects forming part of the GSP;
-- Non-executive director, Mr Sam Randazzo was appointed as
interim Chief Executive Officer ("CEO") while the executive search
for a permanent CEO continues;
-- Appointment of Tennyson Securities as MC Mining's sole broker under the AIM Rules; and
-- Available cash at quarter-end was $2.3 million ($2.0 million
at the end of December 2020) and restricted cash was $0.03
million.
QUARTERLY COMMENTARY
During the quarter, the IDC formally extended the repayment date
of the R160 million ($11.1 million) loan to 31 July 2021. The IDC
also extended the terminal draw down date for the conditional R245
million ($17.0 million) Makhado Project development term loan
facility, to 31 July 2021.
As previously announced, MC Mining has secured a significant
portion of the Makhado project funding package and continues to be
in discussions with a number of parties to complete the balance of
the funding package.
Covid-19
The health and safety of the MC Mining group's employees and its
contractors remains the prevailing priority and measures previously
implemented to prevent the spread of Covid-19 remain in place.
During the quarter, an Uitkomst employee unfortunately passed away
due to Covid-19 and nine Uitkomst employees tested positive for the
virus (FY2021 Q2: one positive test). No positive Covid-19 cases
were reported at the Makhado, Vele and GSP projects.
Covid-19 preventative measures implemented to restrict the
spread of the virus within the MC Mining group workplace are
proving successful with no new cases reported since the
quarter-end.
Uitkomst Colliery - Utrecht Coalfields (70% owned)
One LTI was recorded during the quarter (FY2021 Q2: one
LTI).
Uitkomst had commenced with a Section 189 (of the Labour
Relations Act) restructuring process that was intended to result in
42 positions at the colliery being made redundant. Following a
three-day union led blockade, Uitkomst agreed to the suspension of
the Section 189 process until June 2021. That blockade prevented
mining for three days, resulting in the loss of approximately
8,000t of ROM coal production.
Mining activities during the quarter were also affected by
higher levels of absenteeism due to suspected Covid-19 cases, as
well as by sub-optimal geological conditions being encountered
during mining activities, including a dyke and an area with low
seam heights. Uitkomst Colliery produced 115,944t of ROM coal for
the three months, 9% lower than the comparative March 2020 period
(FY2020 Q3: 127,122t).
Uitkomst Colliery's largest customer experienced equipment
breakdowns in early February which resulted in a six week shutdown
of its steel making plant. This significantly reduced its purchases
of Uitkomst's high value coal in both February and March and
combined with the 9% decline in ROM coal production, this resulted
in sales of Uitkomst higher-value coal being 17% lower than in the
comparative period (53,512t vs. 64,264t). The colliery also sold
8,789t of high ash middlings coal during the quarter (FY2020 Q3:
8,678t). These lower sales volumes led to elevated inventory levels
and Uitkomst had 20,494 t of saleable coal on hand at the end of
the March quarter (FY2020 Q3: 12,316t; FY2021 Q2: 15,092t).
Production at Uitkomst's largest customer has subsequently
normalised and the surplus inventory is expected to be sold during
Q4 FY2021.
Average API4 coal prices were 15% higher in the quarter than in
the comparative period in FY2020 ($91/t vs $79/t). The higher API4
price recorded during the quarter was offset by a change in sales
mix, with sales of high value coal being proportionately lower
compared to Q3 FY2020. Accordingly, despite higher API4 prices,
revenue per tonne only increased by 4% to $71.76/t (FY2020 Q3:
$69.33/t). A significant proportion of Uitkomst's costs are fixed
costs and the 15% decline in sales volumes resulted in production
costs per saleable tonne increasing 14% to $72.74/t (FY2020 Q3:
$63.97/t).
Quarter to Quarter to
end-Mar 2021 end-Mar 2020 %
Production tonnages
Uitkomst ROM (t) 115 944 127 122 (9%)
Sales tonnages
Metallurgical and thermal
coal (t) 53 512 64 264 (17%)
Middlings sales 8 789 8 678 1%
62 301 72 942 (15%)
Quarter financial metrics
Revenue/t ($) 71.76 69.33 4%
Revenue/t (ZAR) 1 073 1 064 1%
Production cost/saleable
tonnes ($)^ 72.74 63.97 14%
--------------------------- -------------- -------------- ------
^ 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 Q2:
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 support for the development of
the Makhado Project. MC Mining previously utilised R160 million
($11.1 million) of the IDC facility 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. During the
quarter, the IDC extended the date for repayment of the R160
million loan plus interest, to 31 July 2021. The IDC also agreed to
extend the terminal draw down date in respect of the conditional
R245 million ($17.0 million) term loan facility for the development
of the Makhado Project, to 31 July 2021, subject to the IDC
reaffirming its financial due diligence.
The Company and IDC continue discussions with the objective of
aligning repayment of the R160 million loan (plus interest) with
the positive cash flows generated by Makhado. MC Mining is
confident that a satisfactory position can be reached with the IDC.
In the unlikely event that the parties cannot reach agreement on
further deferment terms and the Company does not repay the loan by
the repayment date, the financing documentation allows for the debt
to be converted into equity.
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 Q2:
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 Q2: nil) during the quarter.
GSP comprises the Chapudi, Mopane and Generaal areas that are MC
Mining's longer-term coking and thermal coal projects and the DMRE
granted the mining right for the Mopane Project during the quarter.
The Mopane Project contains 230 million gross tonnes in situ of
measured and indicated coal resources [1] and supports MC Mining's
strategy of being South Africa's pre-eminent producer of HCC.
Markets
The global economy is showing signs of improvement following the
spread of Covid-19 in H1 CY2020. This is reflected in the demand
for South African thermal coal with average API4 coal prices during
the quarter improving to $91/t, 15 % higher than the $79/t recorded
in Q3 FY2020 (FY2021 Q2: $73/t). HCC remained under pressure due to
geopolitical events and average prices were 16% lower than the
comparative period ($126/t vs. $149/t).
Appendix 5B - Quarterly Cash Flow Report
The cash position of the MC Mining group as at 31 March 2021 was
$2.3 million.
The aggregate amount of payments to related parties and their
associates as disclosed at item 6.1 of the March quarter Appendix
5B was $81k, comprising a retiring executive director salary, group
life cover and accrued leave entitlements on termination.
Sam Randazzo
Interim 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:
Tony Bevan Company Secretary Endeavour Corporate Services +61 08 9316 9100
Company advisors:
James Harris / James Dance Nominated Adviser Strand Hanson Limited +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
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 Portion 3 (of 2) of
prospects 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%
Portions of Overvlakte 125 MS
(Remaining Extent, 3, 4, 5,
Vele Colliery and prospects 6, 13, 14) Limpopo 100%
Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
------------------------------- ----------------------------------------------- --------- ----------------------
Certain portions of Unsurveyed
Tshikunda 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
[1] The GSP independent Competent Persons Report can be found on
the Company's website:
http://www.mcmining.co.za/our-business/projects/gsp-mbeu-yashu
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UPDEAKLFADAFEFA
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