MC Mining continues to progress projects, interim revenue increases

15th March 2023

By: Tasneem Bulbulia

Senior Contributing Editor Online


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MC Mining’s revenue for the six months ended December 31, 2022, increased by 8% to $14-million, compared with the revenue of $13-million reported for the six months ended December 31, 2021.

Operating profit before interest was $700 000, compared with a loss of $600 000 in the prior corresponding period.

The loss a share from continuing operations and discontinued operations decreased by 7% to $0.50 apiece, from $0.54 apiece in the prior corresponding period.

The headline loss a share narrowed by 7% to $0.50 apiece from $0.54 apiece in the prior corresponding period.

Net asset value increased by 28% to $99-million from $77.1-million as at June 30, 2022.

No dividend was declared for the period.

The interim financial statements for the period contain an independent auditor’s review report, which includes an emphasis of matter paragraph with regard to the existence of a material uncertainty that may cast significant doubt about the group’s ability to continue as a going concern.


MC Mining and its subsidiaries’ principal activities are the mining, exploration and development of coking and thermal coal assets in South Africa.

The company’s principal assets and projects include the Uitkomst colliery, an operating metallurgical and thermal coal mine; the Makhado project, a hard coking and thermal coal exploration and evaluation project; the Vele Aluwani colliery, a semi-soft coking and thermal colliery, previously on care and maintenance but outsourced and recommissioned in December 2022; and three exploration-stage coking and thermal coal projects, namely Chapudi, Generaal and Mopane, in the Soutpansberg Coalfield and collectively called the Greater Soutpansberg project, or GSP.

Uitkomst produced 225 389 t of run-of-mine (RoM) coal during the period under review and the colliery had 27 058 t at site at the end of the period, with a further 36 764 t at port.

Uitkomst sold 104 855 t of coal during the six months, including 98 924 t of high-grade peas and duff, with 71 955 t exported and the balance sold domestically. The exported volumes are 5 352 t lower than previously reported following the subsequent receipt of an updated third-party confirmation.

The colliery also sold 5 931 t of lower-grade middlings coal.

MC Mining says Uitkomst generated “pleasing” results for the period, with revenue of $14-million and a gross profit of $3.9-million. The company increased its interest in Uitkomst during the period when it bought back the 14% interest belonging to a black industrialist shareholder, for $500 000. The terms of the transaction ensure that the Uitkomst equity bought satisfies the ‘once empowered, always empowered’ principle in South Africa, the company says.

MC Mining’s flagship Makhado project is situated in the Soutpansberg Coalfield and all regulatory approvals are in place. Surface rights over the mining and processing areas have been secured.

MC Mining says it is heavily invested in Makhado as the complex regulatory environment in South Africa demanded significant capital and time investment to achieve its current ‘shovel ready’ status.

The development of the project is expected to deliver positive returns for shareholders and position MC Mining as South Africa’s pre-eminent hard coking coal (HCC) producer.

During the period, the company appointed Erudite to complete the detailed planning for a full process design for the Makhado coal processing plant (CPP). Erudite expects to complete the planning during the first half of this calendar year.

The plan is also required by potential funders to complete their assessments.

MC Mining also employed independent consultants to review the Makhado mine plan and this forms part of the detailed execution plan. MC Mining’s directors approved the start of early works at Makhado and the company allocated R71.3-million to this and expects to have this completed at the end of the first half of the calendar year.

The early works began in February and include, among others, a bridge and internal roads, initial bulk earthworks, site security and communication infrastructure.

The Makhado CPP optimisation study was completed by independent experts during the period and the results of this study are being used in Erudite’s detailed CPP and infrastructure design work. The planned Makhado CPP yearly RoM feed capacity is expected to result in an increase in RoM capacity from three-million to four-million tonnes a year in addition to further refinements of the plant design.

The funding initiatives for Makhado continued during the period and these are expected to be finalised in the first half of the year following completion of the detailed designs for the Makhado CPP and updated mine plan.

Vele had been on care and maintenance since late 2013 and the company assessed various strategies to use the asset. These assessments confirmed the significant capital and technical investment required to optimise production at the colliery.

Following the increase in international thermal coal prices in 2022, the outsourcing of operations at Vele was identified as the optimal strategy, as this would secure the necessary investment from a third party to de-water the opencast pit, modify and recommission the CPP and remove a significant portion of the ongoing costs associated with the colliery.

The assessment of outsourcing opportunities resulted in the conclusion of a five-year contract mining agreement with Hlalethembeni Outsourcing Services (HOS) in December 2022.

HOS is mining in terms of an agreed mine plan on an exclusive basis until December 22, 2027, and is targeting monthly production of 60 000 t of saleable thermal coal from Vele. It is responsible for all mining and processing costs, while MC Mining remains responsible for the colliery’s regulatory compliance, rehabilitation guarantees, relationships with authorities and communities, as well as the supply of electricity and water.

HOS recommissioned the Vele CPP in late December and first coal sales began early this year. Operations at the colliery are expected to ramp up to full production during the second quarter of the 2023 calendar year.

The South African Department of Mineral Resources and Energy has granted mining rights for the three project areas comprising the GSP.

The three GSP project areas contain over seven-billion gross tonnes in situ of inferred HCC, semi-soft coking coal and thermal coal resources. The exploration and development of the GSP is the catalyst for MC Mining’s long-term growth and positions the company to be a potential long-term domestic and export metallurgical coal supplier, it says.

The company anticipates beginning with the various studies required for the outstanding water and environmental regulatory approvals following the construction of Makhado.

MC Mining says its focus on safety continued with three lost time incidents recorded during the period under review.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online




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