Coal miner MC Mining has published a bankable feasibility study (BFS) on the Makhado hard coking coal project, in Limpopo.
The BFS was completed by mining consultancy Minxcon and confirms the project’s measured and indicated coal resources at 296-million tonnes and proved and probable coal reserves at 69.3-million tonnes.
The company aims to secure funding for construction of the Makhado mine before the end of the third quarter.
The BFS envisages the initial mining of the West pit, followed by mining of the East and Central pits, while the existing coal processing plant (CPP) at the Vele Colliery will be modified to simultaneously produce hard coking coal (HCC) and export-quality thermal coal.
The West, East and Central pits will be mined at a combined average rate of 3.2-million tonnes a year with the run-of-mine material being crushed and screened at Makhado prior to dispatch to the Vele CPP.
Over the life-of-mine, about two-million tonnes a year of crushed and screened coal will be transported 134 km to the Vele CPP, where the coal will be processed to produce two marketable products – a mid-volatile HCC for sale domestically and internationally and a 5 500 kcal (API3) thermal coal for sale on the international market.
Makhado has an offtake agreement in place with primary steel producer ArcelorMittal South Africa for the domestic supply of up to 450 000 t/y of HCC.
The company is also engaging in offtake discussions with various other parties for the balance of the HCC production and thermal coal.
The BFS envisions the project producing 25.6-million tonnes of saleable coal over the 22-year mine life.
The mine is estimated to create 650 permanent jobs, including for contractors.
The capital cost is estimated at R625-million, with an internal rate of return (after tax) of 38.2% and a payback period of 3.8 years.
MC Mining interim CEO Sam Randazzo, who will step down from the board soon, says the completion of the BFS reflects a key advancement of Makhado and confirms the project’s robust economics.
He says the BFS is based on the project plan with the lowest capital cost options, adding that the project is well-positioned to enjoy the high prevailing coal prices.