The company is making progress in securing the balance of Phase 1 funding for its Makhado Project following lockdown delays.
MC Mining has secured more funding for its flagship Makhado hard coking coal project in a deal that it says shows encouraging support. Columbia Skies Holdings (CSH), a company owned by black industrialist Pitso Madibo, will subscribe for 7.83-million shares in the coal group for about R10 million, giving it a 4.8% stake.
MC Mining said the shares would be issued at R1.27 each, a 10% discount to its volume weighted average share price over the 30 days to 1 September. The funds would be used for general working capital requirements as well as progressing work on Makhado. The company previously secured a R245 million loan from the Industrial Development Corporation, which it said was a critical component in the R535 million debt/equity funding structure for Phase 1 of the project.
With SA producing limited quantities of high-quality metallurgical coal, MC believes the development of Makhado will make it the pre-eminent producer of hard coking coal, which trades at a significant premium to thermal coal and is a key ingredient for making steel. Phase 1 has a nine-year life-of-mine and is forecast to produce 540,000 tonnes of hard coking coal annually as well as 570,000 tonnes of an export quality thermal coal by-product.
We have made significant progress subsequent to the lifting of the Covid-19 lockdown and are in discussions with various potential funders for the balance of the Phase 1 funding,” acting CEO Brenda Berlin said. “The investment by CSH ensures we have the necessary resources to be able to complete the composite funding package, anticipated to be by the end of (calendar year) 2020, as well as providing working capital for the initial period of construction in (the first half of 2021).”
The share subscription is conditional on Reserve Bank approval, which is expected this month. Application would be made for the new shares to trade on London’s AIM, the ASX in Australia and the JSE.
Its shares closed 4% higher at R1.56 on Friday.
Main Image: Steel Guru
