JOHANNESBURG – MC Mining, the junior-listed coal producer, surged almost 7 percent yesterday on news that it had finally acquired the two key properties in Limpopo, which were subject to a land claim, on which its $85 million (R1.22 billion) Makhado hard coking coal project was centred.
MC Mining, formerly known as Coal of Africa, said it had paid R70m for the Lukin and Salaita luxury hunting and game farms owned by Akkerland Boerdery.
MC Mining was granted regulatory approval for the Makhado project and needed to gain access to the farms to build its processing plants. However, it struggled to access the farms because of the brawl between the owners of Akkerland Boerdery and the South Africa government over a land claim.
MC Mining chief executive David Brown said the company’s subsidiary Baobab Mining & Exploration had acquired the Lukin and Salaita properties subject to a "suspensive condition" which the parties expected to be met in January next year.
Brown said the agreement to acquire Lukin and Salaita was a significant step and completed the suite of surface rights required for its permitted flagship Makhado Project.
“With the acquisition of the properties, the company can proceed with the geotechnical and related studies for the mine’s infrastructure,” Brown said.
The government offered R20m for the farms, an offer which was declined, with Akkerland Boerdery claiming an independent valuation valued it at R200m. New Rural Development and Land Reform Minister Maite Nkoana-Mashabana wanted the farms expropriated when the owners refused the government's offer. The owners secured an urgent interdict through the Land Claims Court to halt an eviction by the government.
Akkerland claimed the government wanted the coal reserves under the surface of these farms to facilitate plans by Chinese state-owned entities in the $10bn Musina-Makhado special economic zone, under which Akkerland falls.
Brown said MC Mining had made substantial progress on the Makhado Project milestones, including an off-take agreement for half of the hard coking coal to be produced at the mine.
MC Mining previously announced that it had secured an off-take agreement for Makhado in terms of which it planned to sell half its 800 000 tons a year hard coking coal production to Huadong Coal Trading Centre Company, a Chinese state-owned company.
The JSE and London listed stock jumped 6.77 percent to close at R4.26 a share on the JSE yesterday.
In terms of the purchase agreement for the farms, the R70m will be settled in two equal tranches of R35m each, with the properties pledged as security until the purchase price has been settled.
Brown said that the initial tranche would be funded from internal cash flows. The second tranche would accrue interest at South Africa’s current 10 percent prime interest rate, less 3 percent from the date of transfer, the company said.