MC Mining to issue R15m in shares as part of debt restructuring deal with IDC

MC Mining described discussions aimed at issuing R15m worth of shares as “positive” following an agreement with the Industrial Development Corporation (IDC) to restructure the coal development firm’s debt.

MC Mining is in discussions to finance the first stage R535m development of Makhado, a metallurgical and thermal coal project in South Africa’s Limpopo province.

However, it has debt owing of R120m to the IDC which was borrowed as part of a R240m debt package that also handed the IDC a 5% stake in MC Mining subsidiary, Baobab Mining as well as 2.5% in warrants. This debt was used to establish a study into Makhado and ensure the project was fully permitted.

The plan was to repay the R120m and cancel the undrawn R120 of the original debt, but COVID-19 disrupted MC Mining’s production plans and weakened its balance sheet.

The outcome following negotiations with the IDC is for MC Mining to have until November to repay the R120m initial debt and to borrow R40m of the undrawn R120m, which also has to be repaid by November 30.

Cash must also be raised through the issue of shares.

In return, some R245m of the R535m required for the first stage of Makhado will be provided by the IDC in return for another 1.7% of Baobab and 0.8% in warrants.

Brenda Berlin, interim CEO of MC Mining, said the debt restructuring was “expected to be completed during July/ August 2020 while the process to secure the balance of the Phase 1 funding continues. We anticipate that this will be completed during H2 CY2020, with commencement of the nine-month construction period soon thereafter.”