MC MINING has called an extraordinary general meeting (EGM) after a 6.8% shareholder called for the resignation of key executives amid delays in building the firm’s R575m Makhado thermal and metallurgical coal mine.
The EGM will be held on April 11, according to a statement by MC Mining chairman, Bernard Pryor today.
On February 14, Yi He and Jun Liu, directors of Denocept Properietary, said they wanted Pryor and Sam Randazzo, interim CEO of MC Mining, to resign. They have suggested replacing these directors with well known South African businessmen Nhlanhla Nene – a former minister of finance in South Africa – and Godfrey Gomwe who is former CEO of Anglo American’s South African coal mines.
In a letter to shareholders today, Pryor said Denocept Properietary had offered to provide a R60m convertible loan to MC Mining. However, the company opted for a competing funding arrangement with Senosi Group Holdings Proprietary Ltd (SGIH).
Pryor said SGIH’s R86m funding agreement – of which R40m had already been advanced to MC Mining – was superior to Denocept Proprietary’s loan which would have converted into shares at a 30% discount to MC Mining’s average 30 day price.
Pryor also argued that SGIH – in addition to the premium in its funding arrangement – has experience in coal project development, mining and marketing.
There was also uncertainty over the timing of Denocept Proprietary’s loan which became a factor because MC Mining has been under the kosh financially. The R35m balance of funds it owed to surface rights holders was to fall due at the time of these considerations.
Pryor also said that in supporting the resolutions at the EGM, shareholders would significantly change the composition of the MC Mining board such that it would be heavily in favour of the requisitioning directors, even though they owned a fraction of the firm. “It is therefore reasonable to assume that if the resolutions are passed there will be a change of control of MC Mining without payment of a control premium,” he said.
MC Mining announced earlier this week that it had paid the balance of R35m to the surface rights holders of property critical to the development of Makhado. Makhado has been 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 company announced earlier this year that 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.
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”.