MC Mining secures R20m working capital loan from shareholder

The Makhado Project in the Soutpansberg coalfield, 36km north of Makhado in Limpopo, is MC Mining’s most advanced feasibility-stage project. SUPPLIED.

The Makhado Project in the Soutpansberg coalfield, 36km north of Makhado in Limpopo, is MC Mining’s most advanced feasibility-stage project. SUPPLIED.

Published Jul 1, 2024


MC Mining on Friday announced it had secured a R20 million loan facility from Dendocept Proprietary Limited, which holds about 6.8% in the company.

Funds under the loan will be used to fund the mining group’s working capital.

MC Mining, formerly Coal of Africa, develops and mines for high quality thermal and coking coal in South Africa.

The R20m being advanced by Dendocept will be taken up under MC Mining's wholly-owned subsidiary and group administration company, GVM Metals Administration.

“The facility is available for a period of 12 months from first drawdown and must be repaid on or before the end of this period,” the company said.

“Interest will be paid monthly, calculated using the prevailing Investec South Africa prime interest rate (currently 11.75%) plus a margin of 3%.”

The loan facility was unsecured under guarantees from MC Mining, it added.

Mathews Senosi, MC Mining’s interim chairman, said the loan facility reflected continued shareholder commitment to support the coal miner.

“The company is assessing its corporate and Limpopo project operational and overhead costs and the resources needed to advance the company’s collieries, development and exploration projects, including the flagship Makhado shovel-ready steelmaking hard coking coal project,” explained Senosi.

Georgia-based Goldway Capital’s recently bought out MC Mining, bringing to an end a bitter takeover process in which the boards of the two companies had rough exchanges amid counter accusations of falsifying corporate information.

Last week, MC Mining announced the appointment of Yi Christine He as interim managing director and chief executive, with effect from today, following the resignation of Godfrey Gomwe as managing director and chief executive.

In the year to the end of March, MC Mining’s run-of-mine (ROM) coal production from the Uitkomst steelmaking and thermal coal mine grew by 14% compared to the same period in 2023, to 115 909 tons.

Quarterly sales for the period from the Uitkomst asset amounted to 75 590 tons of high-grade coal

There were limited activities at the Makhado steelmaking hard coking coal project during the same period, while the downscaling of operations at the Vele Aluwani Colliery was completed during January.

The company noted depressed international thermal coal prices after receiving average API4 index prices of $97 (more than R1 700) per ton for the three months to March 2024, compared to $116 per ton previously.

However, premium steelmaking hard coking coal prices “remained elevated”, averaging $312 per ton for the the quarter compared to $280 per ton previously.

“The takeover process adversely impacted the progress of the Makhado Project. This included the suspension of early works and early coal initiatives as well as the managed tender processes for the selection and appointment of the outsourced mining, plant and laboratory operators at Makhado,” the company previously said.

The takeover process by Goldway Capital had also resulted in the cessation of funding activities for the development of the project, although activities for Makhado were expected to be re-initiated soon.