The favourable economics of JSE-listed MC Mining’s flagship Makhado project were confirmed in a bankable feasibility study (BFS) completed by Minxcon during the quarter ended June 30.
The development of Makhado is expected to deliver positive returns for shareholders and could position the company as South Africa’s pre-eminent hard coking coal (HCC) producer, the company points out.
It adds that the BFS confirms the project’s robust economics and is a key milestone in the funding process.
MC Mining is progressing several alternative strategies to raise the required funding with a target date to conclude the requisite financing during the third quarter of the 2022 calendar year.
The BFS is based on the project plan with the lowest capital cost options and results in Makhado’s run-of-mine (RoM) coal being transported to the Vele Colliery for processing for the entire life-of-mine.
The project has an estimated capital cost (including contingencies) of R625-million and a peak funding requirement of R727-million, and is expected to create an estimated 650 permanent employment positions (including contractors) when at steady state production.
The BFS confirmed that Makhado has a short expected construction period of 12 months, positioning the project to take advantage of the short-term forecasted higher global coal prices.
Meanwhile, during the quarter, RoM coal production at the Uitkomst colliery was 7% lower year-on-year.
There was 22 169 t of coal at the Durban port at the end of June for exporting in July/August on the terms of the coal sales and marketing agreement entered into with Overlooked, as announced by the company on July 28.
MC Mining recorded 34 126 t of coal sales during the quarter, comprising 28 360 t of high-grade metallurgical and thermal coal and 5 766 t of lower-grade middlings coal.
Revenue per tonne decreased to $80/t from the previous year with high-quality coal stockpiled for sales into the forecasted higher pricing API4 market, achievable through the marketing agreement in the September quarter.
The integrated water use licence (IWUL) applications for the Uitkomst colliery and nearby Wykom siding were granted by the Department of Water and Sanitation (DWS) in April.
MC Mining reports limited activities undertaken at its Vele semi-soft coking and thermal coal colliery and Greater Soutpansberg projects, which remain on care and maintenance.