MC Mining, formerly Coal of Africa, held $9.7m in cash and $9.7m of undrawn loan facilities from the Industrial Development Corporation at the end of December as it started to generate revenue from its recently purchased colliery.
MC Mining bought Uitkomst Colliery from Pan African Resources late in 2017. It is now the group’s only operating mine. It also has a large coking and thermal coal project called Makhado Lite under development in the Soutpansberg.
MC Mining’s shares, which were recently consolidated on a 20 for one basis, were unchanged at 645c on the JSE by midday on Wednesday. They were at 820c three weeks ago.
MC Mining CEO David Brown said Uitkomst produced 12% more coal at 140,501 tonnes in the December quarter than it did in the September quarter, but sales of metallurgical and blended thermal coal dropped 14% to 142,843 tonnes because the contribution from slurry and buy-ins was affected by adverse weather conditions.
Uitkomst’s revenue gained 22% to $61.09/tonne, while production costs rose 1% to $43.47 per saleable tonne.
The sale of a 21% stake in Uitkomst with vendor financing was being negotiated with black empowerment shareholders and should be finalised in the current quarter, Brown said.
Uitkomst has applied for a water use licence to enable it to exploit resources to the north of the existing operations, which would extend the life of the mine to 16 years.
The Vele colliery remains on care and maintenance.
Money received from the sale of the Mooiplaats colliery for R179.9m, which would be paid in instalments, would be used to support the Makhado Lite project or buy another cash-generating asset, Brown said.
Makhado Lite has secured all necessary permits to begin mining but needed access to two farms, which were currently the subject of land claims, to confirm geotechnical information, Brown said. A resolution was expected by June.
Meanwhile, a competent person’s report has been commissioned and there are discussions under way on offtake contracts. Brown said prices for coking coal continued to rise in the December quarter, reflecting tight supply, which was positive for longer-term trends.
Thermal-coal prices were also positive, with the benchmark API4 index price through Richards Bay rising to $95/ tonne by end-December.
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