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JOHANNESBURG  - MC Mining said on Tuesday it had concluded a sale and purchase agreement for the export quality thermal coal to be produced by the first phase of its Makhado hard coking and thermal coal project.

The parties to the deal are MC Mining’s wholly-owned subsidiary Limpopo Coal Company and one of the world’s largest producers and marketers of bulk commodities, which was not named.

MC Mining’s subsidiary Baobab Mining & Exploration owns the Makhado project, whose nine-month Phase 1 construction period is expected to commence in the third quarter of 2019 and will generate approximately three million tonnes per annum (Mtpa) of run-of-mine coal from the west pit.

This will undergo preliminary processing at the mine, yielding an estimated two million tonnes per annum of run-of-mine coal. The coal will be transported and sold to Limpopo which will, with its modified plant, complete the final processing, producing up to 0.57 Mtpa of export quality thermal coal and 0.54 Mtpa of hard coking coal. 

Construction of Phase 2 of the Makhado in 2022 is expected to produce four Mtpa of run-of-mine coal from the east and central pits, resulting in one Mtpa of thermal coal.

MC Mining said the sales prices would be expressed in US dollars and calculated and agreed on a quarterly basis. Saleable thermal coal would be delivered to the Musina siding and sold on a free-on-rail basis, taking into account rail and port charges.

"We have contracted with one of the world’s largest producers and marketers of seaborne traded coal for the majority of the life of Phase 1," CEO David Brown said. "The signing of this agreement is a further significant step in the advancement of Makhado."

The phased development of the Makhado project is expected to generate a significant number of employment opportunities in Limpopo province and the export of the thermal coal will utilise previously tested logistics infrastructure.

MC Mining said negotiations for a composite debt and equity funding arrangement would likely be completed in the third quarter, with Phase 1 construction commencing afterwards.

- African News Agency (ANA)