JSE-, Aim- and ASX-listed coal explorer and miner MC Mining reports that its Uitkomst colliery produced 127 927 t of run-of-mine coal in the second quarter of this year – a 208% year-on-year increase.
Production during the comparative period in 2020 was limited as a result of the South African government-imposed Covid-19 lockdown, implemented to reduce the spread of the virus, which resulted in the temporary suspension of activities at all mines in the country, including the Uitkomst colliery.
However, MC Mining reports that coal sales to Uitkomst’s largest customer returned to normal levels during the second quarter of this year, after the customer experienced equipment breakdowns during the first quarter of the year, and compared with lower sales levels during the comparative quarter of the Covid-19 lockdown period in 2020.
As a result, MC Mining managed to increase its sales of higher-value coal year-on-year, from 16 707 t to 84 834 t.
The Uitkomst colliery also sold 6 024 t of high-ash middlings coal during the quarter, up from the 2 722 t sold during the same period last year. The sales volumes during the quarter were augmented by the sale of coal stockpiles carried over from the preceding period and Uitkomst had 8 753 t of saleable coal on hand at the end of the quarter.
Meanwhile, MC Mining reports that increased global demand led to the API4 export coal price recovering from the low prices experienced during the Covid-19-induced economic downturn in 2020.
As a result, the average dollar-denominated API4 price was 91% higher at $105/t in the second quarter, compared with $55/t during the second quarter of 2020.
As a consequence, Uitkomst’s average revenue per tonne increased by 47%, to $84.91/t, with this improvement somewhat offset by the strengthening of the rand against the dollar.
In addition, the miner notes that its production costs per saleable tonne decreased by 45% year-on-year, from $103.10/t to $56.74/t. The significantly higher 2020 second-quarter production costs were the result of lower tonnes mined during the prior comparable period.
MAKHADO PROJECT
MC Mining’s flagship 67%-owned Soutpansberg-based Makhado project continues to have favourable economics, with its phased development expected to deliver positive returns for shareholders.
With a life-of-mine in excess of 46 years, the Makhado project positions MC Mining as a pre-eminent hard coking coal producer in South Africa, the company states.
The company reports that the Industrial Development Corporation (IDC) has provided longstanding financial support for the development of the project with a R160-million loan, which MC Mining has used to progress Makhado to its fully-permitted status and to partially fund the acquisition of the surface rights over the project area.
The IDC is also a 6.7% shareholder in MC Mining subsidiary, Baobab Mining and Exploration – the owner of the Makhado project.
MC Mining regularly interacts with the IDC, as well as other potential funders and, subsequent to the end of the second quarter, the IDC extended the date for repayment of the R160-million loan plus interest, to January 31, 2022.
The IDC also agreed to extend the terminal drawdown date in respect of the conditional R245-million term loan facility for the development of the Makhado project, to January 31, 2022, subject to the bank confirming its financial due diligence.
In addition, MC Mining is continuing discussions with the objective of aligning repayment of the IDC facilities with the positive cash flows generated by Makhado.
Meanwhile, MC Mining also reports that its Vele semi-soft coking and thermal coal colliery in Limpopo remained on care and maintenance during the quarter, with no lost-time injuries recorded.
The Vele processing plant is to be refurbished and recommissioned as part of Phase 1 development of the Makhado project.