MC Mining, a Johannesburg-listed coal producer and development firm, said it had agreed to sell 14.2 million shares to the Industrial Development Corporation (IDC) as part of financing for the R535m first stage Makhado metallurgical and thermal coal mine project.
The company announced on July 6 that it would raise R15m from the state-owned bank. Today’s announcement effectively establishes pricing at a 9% discount to MC Mining’s July 17 closing price, equal to 105.56 cents a share.
As a result, the IDC’s stake in the Makhado project will increase to 6.7% from 5%. The share sale is a precursor to drawing on R40m pre-agreed funds for Makhado as well as for general working capital.
MC Mining generates cash from its Uitkomst mine in KwaZulu-Natal, but lockdown measures and problems in previous years related to the conversion to self-operated mining activities has limited the mine’s contribution.
Makhado phase 1 has a nine-year life-of-mine and is forecast to produce 540,000 tons of hard coking coal annually as well as 570,000 tons of an export quality thermal coal by-product, the company said.
“This is a further significant step for MC Mining and we will now focus on securing the balance of the Phase 1 funding, delayed by the Covid-19 lockdown,” said Brenda Berlin, CEO of MC Mining. “The company will also continue negotiations to defer the November 2020 repayment of existing debt owing to the IDC until the Makhado Project is generating positive cash flows,” Berlin added.