Junior coal miner MC Mining has rebuffed a proposed buyout offer by a consortium of investors, labelling it opportunistic and saying it undervalues the potential of its assets.
A consortium of investors represented by Goldway Capital Investment already holds a collective 64% of the shares in MC Mining, which has a primary listing Australia, as well as secondary listings on the JSE and the UK’s Alternative Investment Market (AIM).
MC Mining’s top shareholders include privately owned investment group Senosi, with a stake of 23.9%, followed by venture capital firm Shine Capital with 8.8% and private company Dendocept at 7.1%
Earlier in February, Goldway Capital offered to buy out the remaining shareholders for A$0.16 per share in cash in a deal that, if passed, would result MC Mining being delisted from all the stock exchanges, subject to regulatory approvals in all three countries.
But on Thursday, MC Mining urged the minority shareholders to reject the proposal, which requires at least 82.2% of the shares in issue to go through.
The coal miner argued that its independent board committee had found that the offer was “opportunistic and appears to be timed to take advantage of the updated life of mine plan, and improved production and coal-reserves estimates for the shovel-ready Makhado steelmaking hard coking coal project”.
The flagship and capital-intensive Makhado project had been in the making for the past decade, during which it battled to secure funding as institutions became increasingly cautious about backing fossil-fuel projects, which are seen as a threat to a carbon-free future.
The independent board also concluded that the proposal did not provide an adequate premium for control, and fell below the average premium for a typical change-of-control transaction.
MC Mining relies on the Uitkomst colliery in KwaZulu-Natal for cash generation, but the focus is on the Makhado project, which would be SA’s only producer of hard-coking coal.
Distinct from thermal coal used in power stations, coking coal — and hard-coking coal, in particular — is a premium product used in steelmaking.
MC Mining’s shares jumped 5.45% to R1.74 by early afternoon trade on the JSE on Thursday. In Australia, the share price ended flat at A$0.15.
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