MC Mining’s funding problems took another turn after the coal development firm said today it had asked for more time to pay the balance on properties acquired in 2019.
The properties – Lukin and Salaita – are the surface rights for its Makhado metallurgical and thermal coal project which is situated in South Africa’s Limpopo province.
The company also announced it had asked shareholder and lender the Industrial Development Corporation (IDC) to again extend the repayment date of some R160m as well as the terminal draw-down date for R245m.
These relate to two separate loans provided by the IDC to MC Mining for Makhado which is scoped to produce one million tons of coal comprising 540,000 tons of hard coking coal and 570,000 tons of thermal coal ‘by-product’.
“The IDC is yet to respond and the market will be informed when the outcome of this request is known,” said MC Mining.
Last year, the IDC pulled the plug on the funding of another coal development firm Resource Generation (Resgen). Its Boikarabelo mine was a much larger undertaking than Makhado as it envisaged coal output of 6.5 million tons requiring funding of R900m from the IDC in a combination of mezzanine and senior debt financing.
Funding for thermal coal projects has all but dried up globally as lenders turn their attention to renewable energy. Makhado needs a total of R575m. MC Mining said in 2020 the IDC “remained supportive“.
The balance of the R35m purchase price for the Lukin and Salaita properties was payable three years after transfer of the properties which means it was due on January 10. MC Mining has asked for an extension to February 28 as it was “resolving the funding to make the deferred payment”. The company has agreed to make a R6m instalment by Wednesday.
Unlike Resgen, MC Mining has income from the Uitkomst metallurgical coal mine situated in KwaZulu-Natal province.
MC Mining is without a permanent CEO. Brenda Berlin, then an interim CEO, stepped down from the company in early 2021. The company said in February that “… the process to recruit a permanent CEO is at an advanced stage and the board anticipates that this will be completed in the near future”.
The role is currently being filled on an interim basis by Sam Randazzo, a board member.