REG - MC Mining Limited - Activities Report for the Quarter Ended 30 Sep 23
31/10/2023 09:30
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RNS Number : 8607R MC Mining Limited 31 October 2023
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:
42,686t), 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 access 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% compared 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$82/t).
Quarter to end-Sep 2023 Quarter to end-Sep 2022 %▲
Production volumes
Uitkomst ROM (t) 139,192 126,053 10%
Inventory volumes
High quality duff and peas at site (t) 34,919 24,312 44%
High quality duff and peas at port (t) - 42,115 (100%)
34,919 66,427 (47%)
Sales tonnages
Domestic high-quality duff and peas (t) 100,074 39,730 >100%
Middlings sales (t) 375 2,956 (87%)
100,449 42,686 >100%
Quarter financial metrics
Net revenue/t (US$) 86 125 (31%)
Net revenue/t (ZAR) 1,611 2,124 (24%)
Production cost/saleable tonne (US$)^ 59 82 (28%)
^ 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 Secretary Endeavour Corporate Services +61 8 9316 9100
Company advisers:
Richard Johnson / Rob Patrick Nominated Adviser Strand Hanson Limited +44 20 7409 3494
Rory Scott Broker (AIM) Tennyson Securities +44 20 7186 9031
Marion Brower Financial PR (South Africa) R&A Strategic Communications +27 11 880 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 (http://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.
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
Project Name Tenement Number Location Interest Change during quarter
Chapudi Project* Albert 686 MS Limpopo~ 74%
Bergwater 712 MS 74%
Remaining Extent and Portion 2 of Bergwater 697 MS 74%
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of Bluebell 480 MS 74%
Remaining Extent & Portion 1 of Bushy Rise 702 MS 74%
Castle Koppies 652 MS 74%
Chapudi 752 MS 74%
Remaining Extent, Portions 1, 3 & 4 of Coniston 699 MS 74%
Driehoek 631 MS 74%
Remaining Extent of Dorps-rivier 696 MS 74%
Enfield 512 MS (consolidation of Remaining Extent of Enfield 474 MS, Brosdoorn 74%
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 Extent of Portion 2, Remaining Extent of Portion 74%
3, Portions 1, 4, 5, 6, 7 & 8 of Kliprivier 692 MS
Remaining Extent of Koodoobult 664 MS 74%
Koschade 657 MS (Was Mapani Kop 656 MS) 74%
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 Pienaar 635 MS 74%
Remaining Extent & Portion 1 of Prince's Hill 704 MS 74%
Qualipan 655 MS 74%
Queensdale 707 MS 74%
Remaining Extent & Portion 1 of Ridge End 662 MS 74%
Remaining Extent & Portion 1 of Rochdale 700 MS 74%
Sandilands 708 MS 74%
Portions 1 & 2 of Sandpan 687 MS 74%
Sandstone Edge 658 MS 74%
Remaining Extent of Portions 2 & 3 of Sterkstroom 689 MS 74%
Sutherland 693 MS 74%
Remaining Extent & Portion 1 of Varkfontein 671 MS 74%
Remaining Extent, Portion 2, Remaining Extent of Portion 1 of Vastval 477 MS 74%
Vleifontein 691 MS 74%
Ptn 3, 4, 5 & 6 of Waterpoort 695 MS 74%
Wildebeesthoek 661 MS 74%
Woodlands 701 MS 74%
Kanowna West & Kalbara M27/41 Coolgardie^ Royalty<>
M27/47 Royalty<>
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 Royalty ML63/409,410 Norseman^ Royalty
Kookynie Royalty ML40/061 Leonora^ Royalty
ML40/135,136 Royalty
Makhado Project Fripp 645 MS Limpopo~ 67%(#)
Lukin 643 MS 67%(#)
Mutamba 668 MS 67%(#)
Salaita 188 MT 67%(#)
Tanga 849 MS 67%(#)
Daru 889 MS 67%(#)
Windhoek 900 MS 67%(#)
Generaal Project* Beck 568 MS Limpopo~ 74%
Bekaf 650 MS 74%
Remaining Extent & Portion 1 of Boas 642 MS- 74%
Chase 576 MS 74%
Coen Britz 646 MS 74%
Fanie 578 MS 74%
Portions 1, 2 and Remaining Extent of Generaal 587 MS 74%
Joffre 584 MS 74%
Juliana 647 MS 74%
Kleinenberg 636 MS 74%
Remaining Extent of Maseri Pan 520 MS 74%
Remaining Extent and Portion 2 of Mount Stuart 153 MT 100%
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 Terblanche 155 MT 100%
Van Deventer 641 MS 74%
Wildgoose 577 MS 74%
Mopane Project* Ancaster 501 MS Limpopo~ 100%
Banff 502 MS 74%
Bierman 599 MS 74%
Cavan 508 MS 100%
Cohen 591 MS 100%
Remaining Extent, Portions 1 & 2 of Delft 499 MS 74%
Dreyer 526 MS 74%
Remaining Extent of Du Toit 563 MS 74%
Faure 562 MS 74%
Remaining Extent and Portion 1 of Goosen 530 MS 74%
Hermanus 533 MS 74%
Jutland 536 MS 100%
Krige 495 MS 74%
Mons 557 MS 100%
Remaining Extent of Otto 560 MS (Now Honeymoon) 74%
Remaining Extent & Portion 1 of Pretorius 531 MS 74%
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, Remaining Extent of Portion 10, Portions 13, 74%
14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 26, 27, 29, 30, 35, 36, 37, 38,
39, 40, 41, 44, 45, 46, 48, 49, 50, 51, 52 & 54 of Vera 815 MS
Remaining Extent of Verdun 535 MS 74%
Voorburg 503 MS 100%
Scheveningen 500 MS 74%
Uitkomst Colliery and prospects Portion 3 (of 2) of Kweekspruit No. 22 KwaZulu-Natal~ 84%
Portion 8 (of 1) of Kweekspruit No. 22 84%
Remainder of Portion 1 of Uitkomst No. 95 84%
Portion 5 (of 2) of Uitkomst No. 95 84%
Remainder Portion1 of Vaalbank No. 103 84%
Portion 4 (of 1) of Vaalbank No. 103 84%
Portion 5 (of 1) of Vaalbank No. 103 84%
Remainder of Portion 1 of Rustverwacht No. 151 84%
Remainder of Portion 2 of Rustverwacht No. 151 84%
Remainder of Portion 3 (of 1) of Rustverwacht No. 151 84%
Portion 4 (of 1) Rustverwacht No.151 84%
Portion 5 (of 1) Rustverwacht No. 151 84%
Remainder of Portion 6 (of 1) of Rustverwacht No. 151 84%
Portion 7 (of 1) of Rustverwacht No. 151 84%
Portion 8 (of 2) of Rustverwacht No. 151 84%
Remainder of Portion 9 (of 2) of Rustverwacht No. 151 84%
Portion 11 (of 6) of Rustverwacht No. 151 84%
Portion 12 (of 9) of Rustverwacht No. 151 84%
Portion 13 (of 2) of Rustverwacht No. 151 84%
Portion 14 (of 2) of Rustverwacht No. 151 84%
Portion 15 (of 3) of Rustverwacht No. 151 84%
Portion 16 (of 3) of Rustverwacht No. 151 84%
Portion 17 (of 2) of Rustverwacht No. 151 84%
Portion 18 (of 3) of Waterval No. 157 84%
Remainder of Portion 1 of Klipspruit No. 178 84%
Remainder of Portion 4 of Klipspruit No. 178 84%
Remainder of Portion 5 of Klipspruit No. 178 84%
Portion 6 of Klipspruit No. 178 84%
Portion 7 (of 1) of Klipspruit No. 178 84%
Portion 8 (of 1 )of Klipspruit No. 178 84%
Portion 9 of Klipspruit No. 178 84%
Remainder of Portion 10 (of 5) of Klipspruit No. 178 84%
Portion 11 (of 5) of Klipspruit No. 178 84%
Portion 13 (of 4) of Klipspruit No. 178 84%
Remainder of Portion 14 of Klipspruit No. 178 84%
Portion 16 (of 14) of Klipspruit No. 178 84%
Portion 18 of Klipspruit No. 178 84%
Portion 23 of Klipspruit No. 178 84%
Remainder of Portion 1 of Jackalsdraai No. 299 84%
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%
Remainder of Jericho C No. 413 84%
Portion 1 of Jericho C No. 413 84%
Remainder of Portion 1 of Jericho A No. 414 84%
Remainder of Portion 2 (of 1) of Jericho A No. 414 84%
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 Colliery and prospects Portions of Overvlakte 125 MS (Remaining Extent, 3, 4, 5, 6, 13, 14) Limpopo~ 100%
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%
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