Wrap Text
Activities Report for the quarter ended 31 March 2024 for MC Mining Limited and its Subsidiary Companies
MC Mining Limited
Previously Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000MCM9
JSE share code: MCZ
ASX/AIM code: MCM
ANNOUNCEMENT
30 April 2024
ACTIVITIES REPORT FOR THE QUARTER ENDED 31 MARCH 2024 (FY2024 Q3) FOR MC MINING LIMITED (MC MINING OR THE COMPANY)
AND ITS SUBSIDIARY COMPANIES
HIGHLIGHTS
Operations
• Health and safety remains a priority and we continue the goal to zero harm with one lost-time
injury (LTI) recorded during the quarter (FY2024 Q2: nil LTIs);
• Run-of-mine (ROM) coal production at the Uitkomst steelmaking and thermal coal mine
(Uitkomst Colliery or Uitkomst) was 14% higher than the March 2023 quarter at 115,909 tonnes
(t) (FY2023 Q3: 101,616t);
• Uitkomst sold 75,590t of high-grade coal during the quarter (FY2023 Q3: 75,231t). No sales of
lower grade middlings coal (FY2023 Q3: 2,801);
• Uitkomst had 5,763t (FY2023 Q3: 39,975t) of high-grade coal inventories at the end of the quarter;
• Limited activities at the Makhado steelmaking hard coking coal project (Makhado Project or
Makhado) during the quarter;
• The downscaling of operations at the Vele Aluwani Colliery (Vele Colliery or Vele) was completed
during January 2024 and the Operation Shandukani optimisation strategy was initiated during the
period; and
• Limited activities at the Greater Soutpansberg Project (GSP).
Market Conditions
• Depressed international thermal coal prices continued with average API4 index prices of US$97/t
for the three months, compared to US$116/t in Q2 FY2024 and US$146/t in Q3 of FY2023; and
• Premium steelmaking hard coking coal (HCC) prices, however, remained elevated, averaging
US$312/t for the quarter (FY2023 Q2: US$280/t).
Corporate
• The Company received an A$0.16 off-market takeover offer (Takeover Offer) from Goldway Capital
Investment Limited (Goldway) for all of the shares in MC Mining not already owned by associates
of Goldway; and
• Available cash and facilities of US$2.2 million at the period end (FY2024 Q2: US$3.4 million).
Events subsequent to the end of the quarter
• Subsequent to the end of the quarter on 8 April 2024, the Takeover Offer was declared
unconditional, as Goldway had attained a relevant interest of 83.67% of MC Mining's issued shares
(including shares already owned by associates of Goldway);
• Conclusion of a term sheet between Uitkomst and Paladar Resources Proprietary Limited (Paladar)
for an initial three-month offtake, with the option to extend for a further 12 months, for all of the
high-quality coal produced by the colliery;
• Resignation of Mr Khomotso Mosehla as Independent Non-Executive Director of MC Mining on 19
April 2024; and
• Resignation of Mr Nhlanhla Nene as Non-Executive Director and Chairman of MC Mining on 26
April 2024.
Godfrey Gomwe, Managing Director & Chief Executive Officer, commented:
"The Uitkomst Colliery turnaround plan continues to yield very pleasing results, and ROM coal
production significantly exceeded the comparative period in 2023. Production at the underground
colliery remains challenging due to the geological conditions and extended travel time to the mining
areas and unfortunately the mine recorded one lost-time injury during the quarter. The international
and domestic thermal coal markets remain under pricing pressure and, during the period, the colliery
continued to assess alternative marketing strategies, resulting in the signing of an offtake term sheet
with Paladar in April 2024.
The Company was notified of the Takeover Offer process during September 2023 following the receipt
of a non-binding indicative offer and the Bidder's Statement was received in early February 2024. The
takeover process adversely impacted the progress of the Makhado Project. This included the
suspension of early works and early coal initiatives as well as the managed tender processes for the
selection and appointment of the outsourced mining, plant and laboratory operators at Makhado. The
Takeover Offer also resulted in the cessation of funding activities for the development of the project.
Activities are expected to be reinitiated once the Takeover Offer process is complete.
The outsource agent at the Vele Colliery notified the Company during December 2023 that it intended
to downscale operations due to production challenges combined with elevated logistics costs and
depressed API4 coal prices. The downscaling of operations at the Vele Colliery were completed in
January 2024 and the Company is working with the outsource contractor to develop a production
optimisation strategy for Vele."
DETAILED QUARTERLY OPERATIONS REPORTS
Uitkomst Colliery – Utrecht Coalfields (84% owned)
One LTI was recorded during the quarter (FY2024 Q2: nil LTIs) and the colliery has renewed its focus
on leading indicators to improve safety performance.
Uitkomst produced 115,909t of ROM coal during the quarter (FY2023 Q3: 101,616t). The 14% increase
in ROM coal production is due to the Operation Phenduka optimisation plan implemented in June
2023. Uitkomst sold 75,590t (FY2023 Q3: 75,231t) of high-grade duff and peas coal during the quarter.
The fixed-price contract for the sale of high-ash, lower value middlings coal expired during FY2023 Q4
and Uitkomst sold nil t (FY2023 Q3: 2,801t) during the three months. The colliery had 5,763t (FY2023
Q3: 39,975t) of high-grade coal inventory at the end of the quarter.
Quarter
to end- Quarter to
Mar end-Mar
2024 2023 %
Production volumes
Uitkomst ROM (t) 115,909 101,616 14%
Inventory volumes
High quality duff and peas (t) 5,763 39,975 (86%)
Sales tonnages
High quality duff and peas (t) 75,590 75,231 0%
Middlings sales (t) - 2,801 (100%)
75,590 78,032 (3%)
Quarter financial metrics
Net revenue/t (US$) 80 70 14%
Net revenue/t (ZAR) 1,517 1,242 22%
Production cost/saleable tonne (US$)^ 69 65 6%
^ costs are all South African Rand (ZAR) based
The change in sales mix resulted in revenue per tonne increasing by 14% compared to FY2023 Q3
despite significantly lower API4 coal prices. The colliery's production costs per saleable tonne
increased by 6% to US$69/t (FY2023 Q3: US$65/t).
International thermal coal prices remained under pressure, with an average price of US$97/t during
the quarter, 34% lower than FY2023 Q3 (US$146/t). The depressed international coal prices combined
with the continued poor performance of the state utility responsible for rail and port logistics
impacted Uitkomst's revenue generation. The lack of reliable domestic rail transport has resulted in
higher quality coal that would normally be exported, being sold in the domestic market.
These challenging market conditions led to a reassessment of the colliery's marketing strategy and
the identification of potential partners who would reduce the variability of Uitkomst's revenue and
improve its working capital cycle. Following this, Uitkomst signed a term sheet with Paladar in April
2024. The salient features of the term sheet are:
• Paladar will have the exclusive right to market Uitkomst's high quality coal;
• Initial three-month trial period from May to July 2024 with the joint ability to extend for a further
12 months (i.e. to July 2025);
• Fixed sales price for the trial period and adjustments linked to the API4 price should the agreement
be extended;
• Minimum price payable to Uitkomst should the API4 price decline significantly; and
• Paladar will pay 90% of the invoice amount in the week following production, with the remaining
balance due a maximum of 30 days later.
The Paladar term sheet is expected be converted to a formal offtake agreement in FY2024 Q4.
Makhado Hard Coking Coal Project – Soutpansberg Coalfield (67% owned)
The development of the Company's flagship fully licensed and shovel-ready Makhado Project is
expected to position MC Mining as South Africa's pre-eminent steelmaking HCC producer. Makhado
recorded no LTIs (FY2024 Q2: nil) during the quarter.
The Makhado Project remains a significant strategic asset for the Company that has the potential to
take the Company's production profile to more than 800,000 tonnes per annum of steelmaking HCC
and will generate significant returns for shareholders. Funding and development activities at Makhado
were suspended due to the Takeover Offer process and are expected to be reinitiated when this
process is completed at the end of April 2024.
Vele Aluwani Semi-Soft Coking and Thermal Coal Colliery – Limpopo (Tuli) Coalfield (100% owned)
Vele recorded no LTIs (FY2024 Q2: nil) during the quarter.
The mining and processing operations at the opencast Vele Colliery were outsourced to Hlalethembeni
Outsource Services Proprietary Limited (HOS) in late December 2022. HOS experienced operational
challenges in attaining the targeted monthly saleable coal production while unit costs were adversely
impacted by the lack of access to rail capacity to transport Vele's coal to port. The challenges
experienced by HOS were exacerbated by the decline in the API4 export thermal coal price during
CY2023.
As a result, HOS exercised the hardship clause in the outsource agreement during December 2023 and
commenced downscaling operations at Vele. The downscaling was completed during January 2024.
HOS subsequently initiated Operation Shandukani, a production optimisation strategy. The evaluation
of these measures is expected to take place in FY2024 Q4 and is expected to result in improved
profitability at the colliery.
Greater Soutpansberg Project (GSP) – Soutpansberg Coalfield (74% owned)
The Greater Soutpansberg Projects recorded no LTIs (FY2024 Q1: nil) during the quarter. The Company
executed the mining rights for the Mopane and Generaal project areas during Q2 FY2024. The
execution of the Chapudi mining right is at an advanced stage and is expected to be completed during
Q4 FY2024. The studies required for the environmental and water use licences are expected to
commence during H2 CY2024.
Takeover Offer
Following receipt of a Notice of Intention to make a Takeover Offer and a Revised Non-Binding and
Indicative Proposal in September 2023, Goldway lodged a Bidder's Statement on 2 February 2024. The
Bidder's Statement detailed the terms and conditions of the off-market Takeover Offer by Goldway,
representing a consortium of joint bidders.
The joint bidders include Senosi Group Investment Holdings Proprietary Limited and Dendocept
Proprietary Limited and certain other shareholders and associates who represented, in aggregate,
64.3% of the issued capital in the Company (together, the Consortium). The Takeover Offer was made
by Goldway which proposed to acquire all the MC Mining shares that the Consortium currently did
not own. The Takeover Offer was at a cash price of A$0.16 / ZAR 1.96068 / GBP0.08336 per share.
The Takeover Offer was declared unconditional on 8 April 2024 as the Consortium had received
acceptances for a relevant interest of 83.67% of the Company's issued shares (including shares already
held by Goldway). As a result, the Takeover Offer was successful, and the Takeover Offer period was
extended to 21 April 2024. Following this, Goldway announced on 23 April 2024 that, together with
acceptances received, their relevant interest represented 93.05% of the Company's issued shares. The
Takeover Offer process is expected to be completed on 30 April 2024.
Appendix 5B – Quarterly Cash Flow Report
The Company's available cash balance and facilities as at 31 March 2024 were US$2.2 million. The
aggregate amount of payments to related parties and their associates, as disclosed as item 6.1 of the
March 2024 quarter Appendix 5B, was US$356k, comprising executive and non-executive director
remuneration.
Godfrey Gomwe
Managing Director and Chief Executive Officer
This announcement has been approved by the Company's Disclosure Committee.
All figures are in South African rand or United States dollars unless otherwise stated.
For more information contact:
Tony Bevan Company Endeavour Corporate +61 8 9316
Secretary Services 9100
Company advisers:
Richard Johnson / Rob Nominated Strand Hanson +44 20 7409
Patrick Adviser Limited 3494
Rory Scott Broker (AIM) Tennyson Securities +44 20 7186
9031
Marion Brower Financial PR R&A Strategic +27 11 880
(South Africa) Communications 3924
BSM Sponsors Proprietary Limited is the nominated JSE Sponsor
About MC Mining Limited:
MC Mining is an AIM/ASX/JSE-listed coal exploration, development and mining company operating in South Africa.
MC Mining's key projects include the Uitkomst Colliery (metallurgical and thermal coal), Makhado Project (hard
coking coal), Vele Colliery (semi-soft coking and thermal coal), and the Greater Soutpansberg Projects (coking and
thermal coal).
All figures are denominated in United States dollars unless otherwise stated. Safety metrics are compared to the
preceding quarter while financial and operational metrics are measured against the comparable period in the
previous financial year. A copy of this report is available on the Company's website, www.mcmining.co.za.
A copy of the Appendix 5B can be found here: https://senspdf.jse.co.za/documents/2024/jse/isse/mcze/App_5B.pdf
Forward-looking statements
This Announcement, including information included or incorporated by reference in this Announcement, may
contain "forward-looking statements" concerning MC Mining that are subject to risks and uncertainties. Generally,
the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions
identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could
cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks
and uncertainties relate to factors that are beyond MC Mining's ability to control or estimate precisely, such as future
market conditions, changes in regulatory environment and the behaviour of other market participants. MC Mining
cannot give any assurance that such forward-looking statements will prove to have been correct. The reader is
cautioned not to place undue reliance on these forward-looking statements. MC Mining assumes no obligation and
does not undertake any obligation to update or revise publicly any of the forward-looking statements set out herein,
whether as a result of new information, future events or otherwise, except to the extent legally required.
Statements of intention
Statements of intention are statements of current intentions only, which may change as new information becomes
available or circumstances change.
Glossary
Term Definition
Consortium Goldway and its associates representing 64.3% of the issued share
capital of MC Mining
GSP Greater Soutpansberg Projects
Goldway Goldway Capital Investment Limited
HCC Hard coking coal
HOS Hlalethembeni Outsource Services Proprietary Limited
IDC Industrial Development Corporation of South Africa Limited
LTI Lost time injury
Makhado Project/ Makhado steelmaking hard coking coal project
Makhado
MC Mining/ the MC Mining Limited
Company
Paladar Paladar Resources Proprietary Limited
ROM Run of mine
t tonnes
Takeover Offer Off-market takeover offer of all of the shares not owned by Goldway or
its associates
Uitkomst Colliery/ Uitkomst metallurgical and thermal coal mine
Uitkomst
Vele Colliery/Vele Vele Aluwani Colliery
Tenements held by MC Mining and its Controlled Entities
Change
Project during
Name Tenement Number Location Interest quarter
Chapudi Albert 686 MS Limpopo~ 74%
Project*
Bergwater 712 MS 74%
Remaining Extent and Portion 2 of 74%
Bergwater 697 MS
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of 74%
Bluebell 480 MS
Remaining Extent & Portion 1 of 74%
Bushy Rise 702 MS
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 3 & 4 74%
of Coniston 699 MS
Driehoek 631 MS 74%
Remaining Extent of Dorps-rivier 74%
696 MS
Enfield 512 MS (consolidation of 74%
Remaining Extent of Enfield 474
MS, Brosdoorn 682 MS &
Remaining Extent of Grootvlei
684 MS)
Remaining Extent and Portion 1 of 74%
Grootboomen 476 MS 74%
Grootvlei 684 MS 74%
Kalkbult 709 MS 74%
Remaining Extent, Remaining 74%
Extent of Portion 2, Remaining
Extent of Portion 3, Portions 1,
4, 5, 6, 7 & 8 of Kliprivier 692
MS
Remaining Extent of Koodoobult 74%
664 MS
Change
Project during
Name Tenement Number Location Interest quarter
Koschade 657 MS (Was Mapani Kop 74%
656 MS)
Malapchani 659 MS 74%
Mapani Ridge 660 MS 74%
Melrose 469 MS 74%
Middelfontein 683 MS 74%
Mountain View 706 MS 74%
M'tamba Vlei 654 MS 74%
Remaining Extent & Portion 1 of 74%
Pienaar 635 MS
Remaining Extent & Portion 1 of 74%
Prince's Hill 704 MS
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Remaining Extent & Portion 1 of 74%
Ridge End 662 MS
Remaining Extent & Portion 1 of 74%
Rochdale 700 MS
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 MS 74%
Sandstone Edge 658 MS 74%
Remaining Extent of Portions 2 & 3 74%
of Sterkstroom 689 MS
Sutherland 693 MS 74%
Remaining Extent & Portion 1 of 74%
Varkfontein 671 MS
Remaining Extent, Portion 2, 74%
Remaining Extent of Portion 1 of
Vastval 477 MS
Vleifontein 691 MS 74%
Change
Project during
Name Tenement Number Location Interest quarter
Ptn 3, 4, 5 & 6 of Waterpoort 695 74%
MS
Wildebeesthoek 661 MS 74%
Woodlands 701 MS 74%
Kanowna M27/41 Coolgardie^ Royalty<>
West &
M27/47 Royalty<>
Kalbara
M27/59 Royalty<>
M27/72,27/73 Royalty<>
M27/114 Royalty<>
M27/196 Royalty<>
M27/181 5.99%
M27/414,27/415 Royalty<>
P27/1826-1829 Royalty<>
P27/1830-1842 Royalty<>
P27/1887 Royalty<>
Abbotshall ML63/409,410 Norseman^ Royalty
Royalty
Kookynie ML40/061 Leonora^ Royalty
Royalty
ML40/135,136 Royalty
Makhado Fripp 645 MS Limpopo~ 67%#
Project
Lukin 643 MS 67%#
Mutamba 668 MS 67%#
Salaita 188 MT 67%#
Tanga 849 MS 67%#
Daru 889 MS 67%#
Windhoek 900 MS 67%#
Beck 568 MS Limpopo~ 74%
Change
Project during
Name Tenement Number Location Interest quarter
Generaal Bekaf 650 MS 74%
Project*
Remaining Extent & Portion 1 of 74%
Boas 642 MS-
Chase 576 MS 74%
Coen Britz 646 MS 74%
Fanie 578 MS 74%
Portions 1, 2 and Remaining Extent 74%
of Generaal 587 MS
Joffre 584 MS 74%
Juliana 647 MS 74%
Kleinenberg 636 MS 74%
Remaining Extent of Maseri Pan 74%
520 MS
Remaining Extent and Portion 2 of 100%
Mount Stuart 153 MT
Nakab 184 MT 100%
Phantom 640 MS 74%
Riet 182 MT 100%
Rissik 637 MS 100%
Schuitdrift 179 MT 100%
Septimus 156 MT 100%
Solitude 111 MT 74%
Stayt 183 MT 100%
Remaining Extent & Portion 1 of 100%
Terblanche 155 MT
Van Deventer 641 MS 74%
Wildgoose 577 MS 74%
Ancaster 501 MS Limpopo~ 100%
Change
Project during
Name Tenement Number Location Interest quarter
Mopane Banff 502 MS 74%
Project*
Bierman 599 MS 74%
Cavan 508 MS 100%
Cohen 591 MS 100%
Remaining Extent, Portions 1 & 2 of 74%
Delft 499 MS
Dreyer 526 MS 74%
Remaining Extent of Du Toit 563 74%
MS
Faure 562 MS 74%
Remaining Extent and Portion 1 of 74%
Goosen 530 MS
Hermanus 533 MS 74%
Jutland 536 MS 100%
Krige 495 MS 74%
Mons 557 MS 100%
Remaining Extent of Otto 560 MS 74%
(Now Honeymoon)
Remaining Extent & Portion 1 of 74%
Pretorius 531 MS
Schalk 542 MS 74%
Stubbs 558 MS 100%
Ursa Minor 551 MS 74%
Van Heerden 519 MS 74%
Portions 1, 3, 4, 5, 6, 7, 8, 9, 74%
Remaining Extent of Portion 10,
Portions 13, 14, 15, 16, 17, 18,
19, 20, 21, 22, 23, 24, 26, 27, 29,
30, 35, 36, 37, 38, 39, 40, 41, 44,
Change
Project during
Name Tenement Number Location Interest quarter
45, 46, 48, 49, 50, 51, 52 & 54 of
Vera 815 MS
Remaining Extent of Verdun 535 74%
MS
Voorburg 503 MS 100%
Scheveningen 500 MS 74%
Uitkomst Portion 3 (of 2) of Kweekspruit No. KwaZulu- 84%
Colliery 22 Natal~
and Portion 8 (of 1) of Kweekspruit No. 84%
prospects 22
Remainder of Portion 1 of Uitkomst 84%
No. 95
Portion 5 (of 2) of Uitkomst No. 95 84%
Remainder Portion1 of Vaalbank 84%
No. 103
Portion 4 (of 1) of Vaalbank No. 103 84%
Portion 5 (of 1) of Vaalbank No. 103 84%
Remainder of Portion 1 of 84%
Rustverwacht No. 151
Remainder of Portion 2 of 84%
Rustverwacht No. 151
Remainder of Portion 3 (of 1) of 84%
Rustverwacht No. 151
Portion 4 (of 1) Rustverwacht 84%
No.151
Portion 5 (of 1) Rustverwacht No. 84%
151
Remainder of Portion 6 (of 1) of 84%
Rustverwacht No. 151
Portion 7 (of 1) of Rustverwacht No. 84%
151
Portion 8 (of 2) of Rustverwacht No. 84%
151
Remainder of Portion 9 (of 2) of 84%
Rustverwacht No. 151
Portion 11 (of 6) of Rustverwacht 84%
No. 151
Portion 12 (of 9) of Rustverwacht 84%
No. 151
Portion 13 (of 2) of Rustverwacht 84%
No. 151
Change
Project during
Name Tenement Number Location Interest quarter
Portion 14 (of 2) of Rustverwacht 84%
No. 151
Portion 15 (of 3) of Rustverwacht 84%
No. 151
Portion 16 (of 3) of Rustverwacht 84%
No. 151
Portion 17 (of 2) of Rustverwacht 84%
No. 151
Portion 18 (of 3) of Waterval No. 84%
157
Remainder of Portion 1 of Klipspruit 84%
No. 178
Remainder of Portion 4 of Klipspruit 84%
No. 178
Remainder of Portion 5 of Klipspruit 84%
No. 178
Portion 6 of Klipspruit No. 178 84%
Portion 7 (of 1) of Klipspruit No. 84%
178
Portion 8 (of 1 )of Klipspruit No. 84%
178
Portion 9 of Klipspruit No. 178 84%
Remainder of Portion 10 (of 5) of 84%
Klipspruit No. 178
Portion 11 (of 5) of Klipspruit No. 84%
178
Portion 13 (of 4) of Klipspruit No. 84%
178
Remainder of Portion 14 of 84%
Klipspruit No. 178
Portion 16 (of 14) of Klipspruit No. 84%
178
Portion 18 of Klipspruit No. 178 84%
Portion 23 of Klipspruit No. 178 84%
Remainder of Portion 1 of 84%
Jackalsdraai No. 299
Remainder of Jericho B No. 400 84%
Portion 1 of Jericho B No. 400 84%
Portion 2 of Jericho B No. 400 84%
Portion 3 of Jericho B No. 400 84%
Change
Project during
Name Tenement Number Location Interest quarter
Remainder of Jericho C No. 413 84%
Portion 1 of Jericho C No. 413 84%
Remainder of Portion 1 of Jericho A 84%
No. 414
Remainder of Portion 2 (of 1) of 84%
Jericho A No. 414
Portion 3 (of 1) of Jericho A No. 414 84%
Portion 4 (of 1) of Jericho A No. 414 84%
Portion 5 (of 2) of Jericho A No. 414 84%
Portion 6 (of 1) of Jericho A No. 414 84%
Margin No. 420 84%
Vele Portions of Overvlakte 125 MS Limpopo~ 100%
Colliery (Remaining Extent, 3, 4, 5, 6, 13,
and 14)
prospects
Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
* Form part of the Greater Soutpansberg Projects
~ Tenement located in the Republic of South Africa
^ Tenement located in Australia
#
MC Mining's interest will reduce to 67% on completion of the 26% Broad Based Black Economic
Empowerment (BBBEE) transaction
<> net smelter royalty of 0.5%
Date: 30-04-2024 10:30:00
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