Wrap Text
Activities report for the quarter ended 30 September 2023 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
31 October 2023
ACTIVITIES REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2023 FOR
MC MINING LIMITED (MC Mining or the Company) AND ITS SUBSIDIARY COMPANIES
HIGHLIGHTS
Operations
• Health and safety remains a priority and we continue to make progress, against the background
of the goal of zero harm, with no lost-time injuries (LTIs) recorded during the quarter (FY2023 Q4:
two LTIs);
• Production at the Uitkomst steelmaking and thermal coal mine (Uitkomst Colliery or Uitkomst)
increased following the implementation of a turnaround plan in June 2023 and run-of-mine (ROM)
coal production was 10% higher than the September 2022 quarter at 139,192 tonnes (t) (FY2023
Q1: 126,053t);
• Uitkomst sold 100,449t of coal during the quarter (FY2023 Q1: 84,801t), comprising 100,074t
(FY2023 Q1: 39,730t) of high-grade domestic coal sales and 375t (FY2023 Q1: 2,956t) of lower
grade middlings coal;
• Following expiry of the export marketing agreement at the end of June 2023, Uitkomst had
34,919t (FY2023 Q1: 24,312t) of high-grade coal at the colliery and nil t (FY2023 Q1: 42,115t) at
port at the end of the quarter;
• Steady progress during the quarter on critical early works activities at the Makhado steelmaking
hard coking coal project (Makhado Project or Makhado) and advancing the detailed design of the
coal handling and processing plant (CHPP) and related infrastructure;
• The managed tender processes to select the mining contractor as well as the operating and
maintenance contractors for the Makhado CHPP and the laboratory continued during the quarter;
and
• Ramp-up of mining and processing at the outsourced Vele Aluwani Colliery (Vele Colliery or Vele)
following the recommissioning of the mine in December 2022 and the outsource agent delivered
71,580 t (FY2023 Q1: nil t) of thermal coal during the quarter.
Corporate
• Thermal coal prices continued to decline, averaging US$109/t in the quarter compared to US$115/t
in Q4 FY2023 and US$325/t in Q1 of FY2023. Premium steelmaking hard coking coal (HCC) prices
remained elevated, averaging US$258/t in the quarter (FY2023 Q1: US$250/t); and
• Available cash and facilities of US$5.1 million (FY2023 Q4: net cash balance of US$8.8 million).
Events subsequent to 30 September 2023
• Positive engagement with the Industrial Development Corporation of South Africa Limited and
approval received to extend the repayment date for the R160 million loan (US$8.5 million), plus
interest thereon, to 30 September 2024.
Godfrey Gomwe, Managing Director & Chief Executive Officer, commented:
"The implementation of turnaround plan at the Uitkomst Colliery during June 2023 has yielded very
pleasing results and ROM coal production exceeded the comparative period, despite the increased
incidents of electricity blackouts implemented by Eskom, the state power utility, compared to Q1
FY2023. Production at the underground colliery was impacted by the extended travel time to the
mining areas and the optimisation initiative, which includes a change in the shift system, resulted in
increased mining time, yielding higher volumes of coal. Uitkomst continues to assess alternative
international and domestic coal marketing strategies for the colliery's premium product.
The Company progressed the Makhado Project during the quarter. This includes advancing the early
works, primarily, to ensure that the site is secure, and starting the construction of a bridge across the
Mutamba river along with water infrastructure for the CHPP. We also continued with the detailed
design of the CHPP and progressed the managed tender processes to select the outsourced mining,
plant and laboratory operators. This resulted in the shortlisting of preferred contractors and we
anticipate making the relevant appointments in Q1 CY2024.
The ramp-up of operations at the outsourced Vele Colliery continued during the quarter and the
contractor is expected to be at full production during Q4 CY2023."
DETAILED QUARTERLY OPERATIONS REPORTS
Uitkomst Colliery – Utrecht Coalfields (84% owned)
No LTIs were recorded during the quarter (FY2023 Q4: one LTI) with the continued focus on leading
indicators delivering safety improvements.
Uitkomst produced 139,192t of ROM coal during the quarter (FY2023 Q1: 126,053t). This follows the
implementation of a turnaround plan at the colliery in June 2023. This optimisation initiative includes
a revised underground operating shift system which is designed to increase mining time, yielding
additional ROM coal production. This has resulted in higher volumes of saleable coal and lower unit
production costs. Uitkomst achieved a 10% improvement in ROM coal production despite impact of
daily electricity blackouts. Uitkomst has acces to back-up diesel generators but these are only
sufficient for underground mining operations; additionally the switch from Eskom to internally
generated power affects both underground and surface operations and adds to mining costs.
Uitkomst sold 100,074t (FY2023 Q1: 39,730t) of high-grade pea and duff-sized coal to domestic
customers during the three months while the comparative period included the export of 25,856t of
coal. The switch to domestic sales is due to lower API4 prices in CY2023 with an average price of
US$109/t during the quarter, 66% lower than FY2023 Q1 (US$325/t). The fixed-price contract for the
sale of high-ash, lower value middlings coal expired during the previous quarter and Uitkomst only
sold 375t (FY2023 Q1: 2,956t) during the three months. The colliery had 34,919t (FY2023 Q1: 24,312t;
42,115t at port) of high-grade coal on site at the end of the quarter and the Company continues to
assess potential alternative coal marketing opportunities.
The revenue per tonne declined by 31% conmpared to Q1 FY2023 primarily due to sales into the
domestic market, whereas API4 coal prices were elevated in Q1 FY2023 in which Uitkomst exported
25,856t. The higher coal sales volumes and weaker exchange rate contributed to the 28% decline in
production costs per saleable tonne (FY2024 Q1: US$59/t vs. FY2023 Q1: US$82/t).
Quarter to Quarter to
end-Sep end-Sep
2023 2022 %?
Production volumes
Uitkomst ROM (t) 139,192 126,053 10%
Inventory volumes
High quality duff and peas at site (t) 34,919 24,312 44%
High quality duff and peas at port (t) - 42,115 (100%)
34,919 66,427 (47%)
Sales tonnages
Domestic high-quality duff and peas (t) 100,074 39,730 >100%
Middlings sales (t) 375 2,956 (87%)
100,449 42,686 >100%
Quarter financial metrics
Net revenue/t (US$) 86 125 (31%)
Net revenue/t (ZAR) 1,611 2,124 (24%)
Production cost/saleable tonne
59 82 (28%)
(US$)^
^ costs are all South African Rand (ZAR) based
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 (FY2023 Q4: nil) during the quarter.
Early works
The Company continued to progress the critical Makhado early works during the quarter, including:
• Construction of the main access road and the preparatory earthworks for a bridge across the
Mutamba river;
• Commencement of the construction of the foundations for the CHPP bulk water supply reservoirs;
• Continuation of work on the detailed design, procurement and construction of the power supply
overhead transmission line – a critical path activity;
• Refurbishment of onsite accommodation to house project construction crews; and
• Securing the site including significant progress with erection of fencing.
Tender processes
The Makhado Project will be contractor-operated. First coal production is expected 18 months from
commencement of construction, which is expected during H1 CY2024. The Company advanced the
open tender processes to select the outsourced mining contractor, a CHPP operating contractor and
the analytical laboratory operator during the quarter. This resulted in the short-listing of preferred
contractors. The selection of the mining contractor is at an advanced stage and the Company
anticipates concluding the tender processes in H1 CY2024.
Makhado Project Funding
The Company continued with the Makhado Project composite funding initiatives during the quarter,
including progressing the detailed designs for the CHPP and related infrastructure in preparation for
procurement. This information is required by potential funders and MC Mining anticipates that the
funding will be concluded in H1 CY2024, with construction commencing soon thereafter. The various
initiatives being negotiated include, amongst others, funding arrangements through build, own,
operate, transfer (BOOT); senior debt and debt/equity instruments; coal prepayments; and
engineering, procurement and construction (EPC) contracts.
Vele Aluwani Semi-Soft Coking and Thermal Coal Colliery – Limpopo (Tuli) Coalfield (100% owned)
Vele recorded no LTIs (FY2023 Q4: one LTI) during the quarter.
The mining and processing operations at the opencast Vele Colliery were outsourced to Hlalethembeni
Outsourcing Services (Pty) Ltd (HOS) and recommissioned in late December 2022. HOS is responsible
for all mining and processing costs and the Company remains responsible for the colliery's regulatory
compliance, rehabilitation guarantees, relationships with authorities and communities as well as the
supply of electricity and water. HOS pays a fee of ZAR200/t of coal sold if the monthly average API4
price is higher than $120/t. The contractor delivered 71,580t (FY2023 Q1: nil t) of thermal coal during
the quarter. Ramp-up to full production is expected in Q4 CY2023 with HOS targeting monthly
production of 60,000t of saleable thermal coal from Vele.
Greater Soutpansberg Project (GSP) – Soutpansberg Coalfield (74% owned)
The Greater Soutpansberg Projects recorded no LTIs (FY2023 Q1: nil) during the quarter and no
reportable activities occurred during the period.
Appendix 5B – Quarterly Cash Flow Report
The Company's available cash balance and facilities as at 30 September 2023 was US$5.1 million. The
aggregate amount of payments to related parties and their associates, as disclosed as item 6.1 of the
June 2023 quarter Appendix 5B, was US$149k, 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.
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.
[https://senspdf.jse.co.za/documents/2023/jse/isse/mcze/app5b.pdf]
Glossary
Term Definition
BOOT Build, own, operate, transfer
CHPP Coal handling & processing plant
GSP Greater Soutpansberg Projects
HCC Hard coking coal
HOS Hlalethembeni Outsource Services (Pty) Ltd
LTI Lost time injury
Makhado Project/ Makhado Makhado steelmaking hard coking coal project
MC Mining/ the Company MC Mining Limited
ROM Run of mine
t tonnes
Uitkomst Colliery/ Uitkomst Uitkomst metallurgical and thermal coal mine
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: 31-10-2023 11:30:00
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