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MC Mining mitigates Uitkomst challenges, focuses on developing new projects

25th January 2019

By: Marleny Arnoldi

Deputy Editor Online

     

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Despite having experienced a challenging quarter ended December 31 – the company’s second quarter of the 2019 financial year – ASX-, Aim- and JSE-listed MC Mining remains positive about the prospects for the full year.

The company reported decreased run-of-mine (ROM) production from its Uitkomst colliery, at 112 562 t, compared with the 140 501 t produced in the second quarter of the 2018 financial year, owing to continued equipment availability issues, incorporating the staff of its former mining contractor into new systems and process challenges following the transition to owner mining in August 2018.

“The mining operations at Uitkomst were insourced during August 2018 and the integration of the about 340 staff, as well as equipment and systems continued during the quarter.

“The integration, as well as the commissioning of additional equipment, affected run-of-mine production and this will improve during the March 2019 period. We also started with the construction of the coarse discard plant modifications during the quarter and this expansion is expected to yield an additional 40 000 t of saleable product per year,” CEO David Brown affirmed in a statement published on Friday.

A number of shifts were lost owing to these issues and corrective action has been implemented and improved production is expected during the current quarter.

The reduction in production resulted in sales of metallurgical, high-quality and blended thermal coal decreasing to 67 606 t from the 94 271 t sold in the comparable period in the 2018 financial year.

Additionally, as expected, MC did not sell coal to third parties in the reporting period, owing to supply contracts having expired during the 2018 financial year.

However, thermal coal prices were in the company’s favour, resulting in an average revenue per saleable tonne of $91.25, compared with $61.09/t in the prior comparable period.

Plant modifications have started at Uitkomst to facilitate the production of an additional high-ash, coarse discard product.

The Vele coking and thermal colliery remained on care and maintenance during the reporting period.

Meanwhile, during the reporting quarter, MC acquired two key surface rights at the Likin and Salaita properties that are required for its Makhado hard coking and thermal coal project.

The company also signed a coal purchase agreement with Chinese State-owned Huadong Coal Trading Centre for the offtake of up to 450 000 t/y of hard coking coal to be produced by the Makhado project.

“The signing of the offtake agreement reaffirms Makhado’s world-class coal qualities and reflects the international appetite for this type of coking coal. Export sales stand to positively contribute to the national balance of payments and positions MC as South Africa’s pre-eminent producer of high-grade metallurgical coal.

“Negotiations for the sale of the remaining hard coking coal, as well as the thermal coal, from the Makhado project are at an advanced stage, while funding initiatives are also progressing and we anticipate finalising all offtake agreements by the end of June,” said Brown.  

Moreover, the Department of Mineral Resources granted a mining right for MC’s 74%-owned Chapudi coking and thermal coal project, which is one of the three projects comprising the company’s longer-term Greater Soutpansberg Project (GSP), which is situated in the Southpansberg coalfield of South Africa’s Limpopo province.

“The granting of the mining right for the Chapudi project is a further step in unlocking value from MC’s significant coking and thermal coal assets and the GSP is positioned to be a potential long-term coal supplier to the planned Musina-Makhado special economic zone.

“The Mopane and Generaal projects’ mining right applications are at an advanced stage and we anticipate that these will be granted in the near future. Once the full suite of mining rights have been granted, we will start with the various studies required for the water and environmental regulatory approvals,” noted Brown.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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