Name of the Project
Makhado hard coking and thermal coal project.

Location
Limpopo, South Africa.

Project Owner/s
Baobab Mining & Exploration, the owner of the mining right for the Makhado hard coking and thermal coal project (Makhado project), is majority-owned by MC Mining (69%), formerly Coal of Africa Limited.

The Industrial Development Corporation owns 5% of Baobab’s shares; 20% is held by a community trust, with seven local communities situated in the project’s vicinity being the beneficiaries. The remaining 6% is held by a black industrialist.

Project Description
Makhado is classified as an evaluation asset and has not historically been mined.

The project will be completed in two phases.

Phase 1 will start with the development of Makhado’s west pit, producing three-million tonnes a year run-of-mine (RoM) coal. The coal will be mined by an independent mining contractor using truck-and-shovel, modified terrace mining methods.

RoM coal will be partially beneficiated before being dispatched to MC Mining’s Limpopo Coal Company subsidiary’s modified Vele colliery for processing. About two-million tonnes a year of RoM coal (ex-discard) will be trucked to Vele to be processed at the colliery’s enhanced plant. The plant modifications consist of, among others, a new fines circuit comprising a reflux classifier in series with the existing spiral plant, a low-density secondary wash plant and a froth flotation plant to capture the ultrafine coal.

At steady state, the operation will produce 1.1-million tonnes of saleable coal – 540 000 t/y of hard coking coal and 570 000 t/y of 5 500 kcal thermal coal.

The saleable coal will be trucked to the Musina siding for railing to domestic and/or export clients.

Phase 2 involves the implementation of the Makhado Lite plan, which will produce about 1.7-million tonnes a year of saleable coal, comprising 700 000 t/y to 800 000 t/y of hard coking coal, and between 900 000 t/y and one-million tonnes a year of thermal coal. The project involves the development and mining of the east pit, Makhado processing plant and related infrastructure.

Potential Job Creation
Phase 1 mining and processing will be outsourced to experienced third parties who have previously operated in South Africa and is expected to create about 650 permanent employment opportunities.

Net Present Value/Internal Rate of Return
Phase 1 has an estimated internal rate of return of more than 45%, with a payback of 2.5 years.

Capital Expenditure
Phase 1 will cost about R400-million.

Planned Start /End Date
Construction at Makhado and Vele will occur simultaneously and will take nine months to complete, with construction expected to start in the third quarter of 2019.

Phase 2 will be implemented in about 2022.

Latest Developments
MC Mining has reported that appeals against an amendment to an environmental authorisation for its Makhado project, allowing for the transportation of coal to Musina by road rather than rail, have been dismissed.

Last September, the national Department of Mineral Resources and the Limpopo Department of Economic Development, Environment and Tourism approved an application by Baobab to amend the Makhado Environmental Authorisation, but this was suspended after a group of environmentalists and local farmers appealed the decision.

MC Mining CEO David Brown has said that the dismissal of the appeals reinforces the robustness of Baobab's permitting processes despite continued attempts by "narrow interest groups" to halt the Makhado project's progress.

"The company anticipates that, funding dependent, construction of Makhado Phase 1 should commence in the third quarter, contributing significantly to the socioeconomic development in the area and generating positive returns for shareholders in the near-term," he has said.

MC Mining has concluded a sale and purchase agreement for the export quality thermal coal to be produced by the first phase the project with an unnamed party.

Key Contracts and Suppliers
Minxcon (competent person’s report).

Proposals for full mining services have been sourced from various contract mining companies, with turnkey processing plant construction and operating quotes obtained from potential service providers.

On Budget and on Time?
Not stated.

Contact Details for Project Information
MC Mining, tel +27 10 003 8000, fax +27 11 388 8333 or email adminza@mcmining.co.za.