MC Mining CEO Godfrey Gomwe
JSE listed MC Mining has reported a significant decrease in its aftertax loss for the year ended June 30, thanks to a marketing agreement that has paved the way for lucrative opportunities in the global coal market.
The company's loss decreased by 79% to $4.4-million, compared with a loss of $20.8-million in the 2022 financial year.
MC saw a notable increase in revenue, which surged by 91% to $44.8-million in the 2023 financial year, compared with $23.5-million in 2022. However, the cost of sales also increased substantially, rising by 96% to $41.2-million, compared to $21-million a year prior. This resulted in a 43% increase in gross profit, with the 2023 financial year reporting $3.6-million compared to last year’s $2.5-million.
The company’s revenue benefitted from the coal sales and marketing agreement with Overlooked Collieries, which provided it access to the more lucrative international market.
Of Uitkomst sales revenue of $34.2-million, export coal sales accounted for $11.4-million.
The sale of Uitkomst coal on the international market resulted in net revenue per tonne increasing to $142/5, from $104/t. Uitkomst’s cost per saleable tonnes also increased from $85/t to $123/t, owing to an increase in costs for explosives, employees, logistics and port costs among others.
The Uitkomst colliery produced 444 984/t in the 12 months under review, down 5% on the previous year.
Meanwhile, MD and CEO Godfrey Gomwe said that MC Mining made pleasing progress during the 2023 financial year.
In November 2022, MC Mining completed a fully underwritten rights issue, raising net proceeds of $21.4-million. These funds were used to facilitate loan repayments, totalling $5.1-million in the 2023 financial year, which included $3.4-million settled in equity as part of the Rights Issue.
Gomwe said the rights issue provided an opportunity for new equity investors to participate in MC Mining’s growth strategy.
“The additional capital transformed the company’s balance sheet and facilitated the settlement of over $3.9-million of debt. The rights issue is a further key milestone towards raising the financing required for our flagship Makhado project as it unlocks other sources of funding, enabling the positioning of MC Mining as the only large-scale producer of steelmaking hard coking coal in South Africa.”
The Makhado coal handling and processing plant (CHPP) optimisation study was completed during the year under review, confirming the benefits of increasing the CHPP yearly run-of-mine feed capacity from 3.2-million tonnes a year to 4-million tonnes a year.
The increase in volumes was used in the detailed CHPP and infrastructure design work while revised mine plans were completed during the 2023 financial year.
The company’s directors approved expenditure of $3.9-million on early works at Makhado and this started during the year, while the funding initiatives for the balance of the capital required continued and are expected to be finalised in the second half of the 2023 calendar year.
Moreover, Gomwe highlighted that the Vele Aluwani colliery had been on care-and-maintenance for almost ten years and that, during this time, the company had assessed various strategies to use the asset.
Operations at the colliery were outsourced during the 2023 fiscal year and coal sales started in January, with ramp-up to full production expected in the fourth quarter.
“The recommissioning of Vele created 333 permanent job positions and the resumption of production will also alleviate any ‘use it or lose it’ risk associated with unused mining assets in South Africa,” Gomwe added.