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. Plant modifications include 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, the 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
The Industrial Development Corporation of South Africa’s (IDC’s) credit committee has approved a R245-million loan facility for MC Mining for the construction of Phase 1 of its Makhado hard coking coal project.

The term loan reaffirms the economics of the project and follows the conclusion of offtake agreements for the coal to be produced by Phase 1, MC Mining has said.

The loan will be used to develop the west pit at Makhado and modify the existing Vele Colliery processing plant, with construction expected to take nine months. First coal production will start thereafter.

Drawdown of the loan can take place any time before June 30, 2021.

Capital repayment will start 24 months after the first drawdown and the amount is repayable in 20 equal quarterly instalments.

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.