JOHANNESBURG - MC Mining said on Wednesday it secured a R20 million, approximately US$1.4 million, loan facility from Absa to fund short-term working capital requirements and potential expansion opportunities for its 70 percent owned Uitkomst Colliery in KwaZulu-Natal.
In August Uitkomst Colliery also procured a five-year R15 million revolving asset finance facility from Absa to finance the acquisition of new underground mining equipment following the transition to owner-operated mining at the colliery.
Earlier in August, MC Mining bought independent mining contractor Khethekile Mining operations for R65 million at Uitkomst metallurgical and thermal coal colliery. It also acquired approximately 340 contractor workers and mining equipment in the deal.
MC Mining said Uitkomst generated more cash flows than expected when it acquired the colliery in June 2017. The miner said the facility would be used to fund short-term working capital requirements and potential expansion opportunities.
This recent Absa loan has a floating coupon at the South African prime rate, currently 10 percent per annum plus one percent, with Uitkomst debtors ceded as security and is subject to annual review.
David Brown, MC Mining's chief executive, said the new loan was an endorsement of the potential of the colliery. The Uitkomst colliery has a remaining mining life of approximately 16 years, including a planned mine extension, and the coal produced is sold into local metallurgical and thermal markets.
"The facility further enhances our relationship with Absa and is an endorsement by an independent financial institution of the potential of Uitkomst Colliery and its ability to deliver on tonnage targets coupled with prevailing favourable coal prices.
"In addition, MC Mining continues to progress with various initiatives relating to the Makhado hard coking and thermal coal project with further updates to come.”