MC Mining CEO David Brown
PERTH (miningweekly.com) – South Africa-focused coal miner MC Mining has widened its after-tax loss from $12.9-million in the six months ended December 2016, to $97.3-million in the same period of 2017.
The loss includes a cost of sales of $14.36-million, and an impairment of $87.5-million on the Vele coking and thermal colliery, as expected production from the Limpopo-based project is delayed by two years.
MC Mining's investment in Vele and the positioning of the colliery within the company's portfolio will be finalised before the end of the current financial year, CEO David Brown said on Thursday.
The company, previously known as Coal of Africa, reported revenue of $17-million for the six months to December, with the recently acquired Uitkomst colliery delivering 346 336 t of run of mine (ROM) coal during the period under review. The mine, which MC Mining bought from Pan African Resources, processed 265 609 t of Uitkomst ROM coal and 80 727 t of purchased ROM, resulting in sales of 308 275 t.
The ASX-, Aim- and JSE-listed miner is currently also developing the Makhado project, with construction estimated to take 12 months to complete. The project is expected to cost between $75-million and $85-million to construct, and will produce some 1.7-million tonnes a year of saleable coal, over a mine life of 29 years.
“Makhado has the requisite regulatory approvals to commence mining and the company continues its efforts to secure access to two key properties for the completion of confirmatory geotechnical drilling. The company anticipates that this will be resolved in the second half of the 2018 financial year with the marketing and fundraising elements being progressed in the first half of 2019. The shortened construction period ensures Makhado is positioned to take advantage of higher hard coking and thermal coal prices, delivering positive returns for shareholders in the near term,” Brown stated.
In terms of the sale of the Mooiplaats assets, MC Mining would achieve an operational cost saving of about $1.4-million a year. The aggregate proceeds of $14.5-million would be used to further develop the Makhado project, or for the "potential acquisition of a second cash-generating asset", Brown said.
At the end of December, MC Mining had $10.2-million cash and cash equivalent on hand, compared with the $9.6-million reported at the end of the June interim period.