A CHINESE firm listed in Hong Kong has bought control of South African thermal and metallurgical coal development firm MC Mining.
The $90m (R1.6bn) deal was announced today by MC Mining and is the latest changing of the guard after Goldway Capital Investments bought the company in April in an all-share deal worth about R800m (for roughly 80%).
Kinetic Development Group (Kinetic) will buy 51% of MC Mining which represents a significant upgrade in valuation less than five months during which time coal prices have been relatively static.
Kinetic will buy MC Mining in two tranches, the first for roughly $12m and the balance about seven days later. Chairman Wenzhong Ju said the deal was part of his firm’s diversification strategy in steelmaking and thermal coal.
MC Mining has bumbled along for years without ever managing to finance the Makhado project in the Limpopo province, a metallurgical and thermal coal prospect. According to Mathews Sinosi, chairman, today’s deal does just that.
MC Mining said last year it planned to produce 46 million tons in saleable coal from the Makhado project of which about 22.5Mt would be metallurgical coal. This was an improvement on previous project scope owing to an increase in the economically extractable resource.
The rate of mining annually would increase to four million tons from an estimate of 3.2Mt previously. The coal handling plant would also be increased to allow for a doubling to four million tons, said MC Mining at the time. MC Mining currently relies on the Uitkomst colliery in KwaZulu-Natal for cash generation.
Today’s deal also sets the groundwork for the continued development of MC Mining’s formerly mothballed coal plant Vele, renamed Vele Aluwani Colliery, as well as other prospects in the Limpopo province’s Soutpansberg district.
This may be the last transaction for MC Mining before it disappears from public life having earlier this year delisted from London’s AIM market. During its time in the public eye tumult was MC Mining’s signature move. It suffered management ousters no less than four times, the last being the contested takeover by Senosi’s consortium.
Senosi is also behind the recapitalisation of Bushveld Minerals, a vanadium miner, though that transaction has not proceeded smoothly. In July, Bushveld CEO Craig Coltman said he had read “the riot act” to Senosi’s Southern Point Resources (SPR) after a delay in promised funding. “I have never seen anything like this in my life and I have done a lot of these deals. But it is what it is.”
