Coal miner MC Mining’s Uitkomst Colliery produced 127 122 t of run-of-mine (RoM) coal in its third quarter, ended March 26 − the day before South Africa entered into a five-week lockdown to curb the spread of Covid-19 infections.
Output for the quarter was 12% higher than the 113 190 t produced in the quarter ended March 31, 2019.
The higher output was achieved despite the loss of about 8 000 t of RoM coal production owing to the lockdown.
The lockdown has since resulted in the colliery being placed on care and maintenance and has also impacted on activities at the company’s development projects in Limpopo.
The miner’s Vele semi-soft coking and thermal coal colliery remained on care and maintenance during the quarter, but its processing plant is expected to be refurbished and recommissioned as part of Phase 1 of the Makhado project when financed.
The lockdown also resulted in MC having to implement a ‘no work, no pay’ policy for non-essential staff. Following this and subsequent to the end of the quarter, MC says it has successfully applied for a portion of wages to be paid by the government’s Temporary Employee Relief Scheme.
This will reduce the adverse financial impacts that the lockdown is having on staff and the funds will be distributed to eligible employees in April, the company confirms.
Additionally, sales of high-grade metallurgical, thermal and high-ash middlings coal were 4% higher than the comparative period, at 72 942 t versus 70 721 t.
In a statement on April 24, acting CEO Brenda Berlin noted that the lockdown had also impacted on MC’s corporate office and Makhado, Vele and Greater Soutpansberg project (GSP) sites.
“We have implemented contingency programmes, ensuring key activities continue remotely in isolated, safe environments,” she commented, adding that the company continued to interact with potential domestic and international capital-providers during the lockdown.
She anticipates the process to secure the balance of funding required to start development of Phase 1 of Makhado will be completed in the second or third quarter of this calendar year, with construction to start shortly thereafter.
The continued focus on safety contributed to the improved performance at the Uitkomst Colliery, which recorded one lost-time injury during the quarter.
While production was 12% higher than the comparative period, sales for the quarter of high-grade metallurgical and thermal coal were 64 264 t while 8 678 t of high-ash middlings coal were sold.
The Uitkomst Colliery has an estimated 15-year life-of-mine (LoM) which includes the development of a north adit, or horizontal shaft, and the colliery is in the process of reassessing options regarding the design of the planned north adit.
MC’s flagship Makhado project, which recorded no injuries for the quarter, has very “favourable” economics and its phased development will deliver positive returns for shareholders, the company says.
Makhado has a LoM of more than 46 years and construction of the project will position MC as South Africa’s pre-eminent hard coking coal producer.
The construction of Makhado Phase 1 comprises the development of the west pit and modifications to the existing Vele Colliery processing plant.
The company concluded the initial step in the Phase 1 composite debt/equity funding process when it secured a conditional R245-million term loan facility from the Industrial Development Corporation of South Africa.
During the quarter under review, the company advanced various initiatives to raise the balance of the funding required. This included positive discussions with debt providers, current shareholders and potential new shareholders at both group and project level.
Phase 1 has a nine-month construction period with first coal sales in month ten.
According to the company, Phase 1 is a critical step in the development of Phase 2 of the Makhado project, which also has significant positive economics, and the company has already secured offtake agreements for about 50% of the estimated 800 000 t/y of Phase 2’s hard coking coal.
GSP, which comprises the Chapudi, Mopane and Generaal areas that are MC Mining’s longer-term coking and thermal coal projects, recorded no injuries during the quarter.