JOHANNESBURG - MC Mining, formerly known as Coal of Africa, is considering issuing new equity to fund its Makhado mine after reporting widening interim losses, as coal prices plummeted 30percent amid pressure on gas prices.
The company on Friday reported that its losses during the half-year to December had widened to $7.1million (R114.74m) or 4.95cents a share, compared to a loss of $3.6m or 2.49c per share, a year earlier. The company said the 30percent decline in API4 coal prices resulted in revenue falling to $11.4m from $15.2m previously.
Gross profit declined to $300m from $2.9m.
Acting chief executive Brenda Berlin said the company was considering issuing new equity to existing shareholders in a bid to raise the $20m balance required for the construction of phase 1 of the Makhado thermal coal mine.
Berlin would also explore debt funding coupled with contractor funding to raise funding for the $37m required to develop phase 1 of the Makhado mine.
“Discussions with potential funders for the balance are progressing. We anticipate that this process should be completed in the first half of 2020, with construction commencing in the third quarter of 2020,” said Berlin.
The completion of phase 1 would result in MC Mining being the pre-eminent South African producer of hard coking coal, she said. Berlin took over from David Brown, who stepped down in January. The company received a major boost when it received a $17.4m term-loan from the Industrial Development Corporation (IDC) towards building phase 1 of the Makhado mine.
The group said Makhado had all of the regulatory permits required to commence mining operations. The project had a 46-year mining life, of which phase 1 would be mined for nine-years, and phase 2 would be mined for the remaining 37 years.
The construction of the phase 1 pit, plant and infrastructure would take nine months, with the first coal sales in month 10.
The company said phase 1 would produce 540000 tons of hard coking coal a year and 570000 tons of a thermal coal by-product that would be trucked to the Musina siding for sale to the domestic and export customers using previously tested road and rail logistics infrastructure.
MC Mining shares rose 32.78percent to close at R2.39 on the JSE on Friday.