MC Mining raises flag on possible shares for cash as waits on new backers to support Makhado

MC MINING’S debt problems were eased earlier this month after the Industrial Development Corporation (IDC) agreed to extend the deadline for the repayment of some R160m as well as the terminal draw-down date for R245m to November 30.

The IDC, which is a 6% shareholder in MC Mining’s Makhado metallurgical and thermal coal project, has also agreed to take equity instead of cash if the debt isn’t repaid by November, according to MC Mining. The IDC remained “supportive”, said MC Mining.

MC Mining operates the Uitkomst metallurgical mine in KwaZulu-Natal province, but it’s main investment proposition is development of Makhado.

Makhado, a R575m project, 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’.

Last year the IDC pulled its support for Resource Generation’s (Resgen’s) 6.5 million tons a year Boikarabelo thermal project. Resign is now in the throes of liquidation.

Meanwhile, MC Mining also has had terms relating to the settlement of R35m in debt related to the purchase of two properties on which Makhado will be built to the end of this month. A R6m instalment was made on January 12.

MC Mining is also seeking for project capital to complete the funding package of Makhado which it said today would either be through equity funding, the issue of shares for cash or through further debt.

“A number of parties are continuing their due diligence review for providing the balance of the funding required by the company to develop Makhado,” MC Mining said. It was “confident” the completion of the project finance would be finalised in the first half of 2022.

Uitkomst reported a 2% quarter-on-quarter decline in projection to 107,188 tons but suffered a more meaning slide in sales owing to “operational challenges” in early November. As a result, sales totalled 43,280 tons, a 40% quarter-on-quarter decline.