TIDMMCM
RNS Number : 7610H
MC Mining Limited
15 March 2018
ANNOUNCEMENT
15 March 2018
HALF YEAR RESULTS FOR THE PERIODING 31 DECEMBER 2017
MC Mining Limited ("MC Mining", "MCM" or "the Company") is
pleased to provide its interim financial statements for the year
ended 31 December 2017 (the "Period"). All figures are denominated
in United States dollars unless otherwise stated and the full
report is available on the Company's website,
www.mcmining.co.za.
Highlights
-- No fatalities and no lost-time injuries ("LTIs") recorded during the Period (2017: none);
-- The Uitkomst metallurgical and thermal coal colliery
("Uitkomst Colliery" or "Uitkomst") processed 346,336 tonnes ("t")
of run of mine ("ROM") coal during the period, resulting in sales
of 308,275t;
-- MC Mining Board approval of the Makhado hard coking coal
'Lite' evaluation project ("Makhado Project" or "Makhado"), has
significantly reduced expected capital requirements and the
construction period;
-- Commencement of the Competent Persons Report ("CPR") on the
Makhado Project by independent expert Minxcon (Proprietary) Limited
("Minxcon"); and
-- Vele coking and thermal coal colliery ("Vele") remained on care and maintenance.
Corporate and market features
-- Delivery on MCM's balance sheet restructuring strategy with
the sale of the Mooiplaats thermal coal colliery ("Mooiplaats
Colliery" or "Mooiplaats") for R179.9 million ($14.5 million);
-- Change of the Company's name to MC Mining Limited and a 20 for one share consolidation (the "Consolidation") as approved by shareholders at the November 2017 Annual General Meeting ("AGM"); and
-- Positive coking and thermal coal price movements during the
Period, principally due to market supply constraints.
Financial review
-- The loss for the Period of $97.34 million (H1 FY2017: loss of
$12.97 million) included an $87.5 million impairment of the Vele
asset; and
-- Cash balance of $10.2 million (H1 FY2017: $7.2 million; FY2017: $9.6 million).
David Brown, CEO commented:
"The Company recorded significant progress during the Period
with production from the Uitkomst Colliery, further advancement of
the Makhado Project, as well as the sale of the non-core Mooiplaats
asset. These successful initiatives were key milestones to ensure
MC Mining becomes a self-sufficient mid-tier coal mining
company."
"The Mooiplaats disposal will yield annual operational cost
savings of approximately $1.4 million while the aggregate proceeds
of $14.5 million will be used to further develop our flagship
Makhado Project and/ or the potential acquisition of a second cash
generating asset."
"Makhado has the requisite regulatory approvals to commence
mining and the Company continues its efforts to secure access to
two key properties for the completion of confirmatory geotechnical
drilling. The Company anticipates that this will be resolved in H2
FY2018 with the marketing and fundraising elements being progressed
in H1 FY2019. The shortened construction period ensures Makhado is
positioned to take advantage of higher hard coking and thermal coal
prices, delivering positive returns for shareholders in the near
term."
"The recent political developments in South Africa have resulted
in a much stronger currency, particularly against the United States
dollar. The change in economic climate together with the Company
prioritising the development of the Makhado Project, resulted a
$87.5 million impairment in its investment in Vele and the
positioning of the colliery within MC Mining's portfolio will be
finalised before the end of the current financial year."
Review of Operations
Uitkomst Colliery - Utrecht Coalfields (100% owned - 70% post
BEE transactions)
The Uitkomst Colliery employs approximately 573 employees
(including contractors) and reported no LTIs during the Period.
The Company acquired a 91% interest in the Uitkomst Colliery at
the end of June 2017, with the remaining 9% held by broad-based
Black Economic Empowerment ("BEE") trusts, including employees and
communities.
Uitkomst comprises the existing underground coal mine and a
planned life of mine ("LOM") extension directly to the north of
current operations, totalling 16 years remaining LOM. The LOM
extension requires the development of a north adit (horizontal
shaft) and the colliery has applied for an amendment of its
Integrated Water Use Licence ("IWUL") prior to commencing this
expansion. Uitkomst sells sized coal (peas) products to local
energy generation facilities with the 0 to 40mm product sold into
the domestic metallurgical market for use as pulverised coal.
The Uitkomst Colliery processed 346,336t of ROM coal during the
Period, comprising 265,609t of Uitkomst ROM coal and 80,727t of
purchased ROM. This resulted in sales of 308,275t, consisting of
174,948t of Uitkomst ROM, 53,690t of slurry used for blending and
79,637t of purchased ROM coal.
Revenue in US dollars totalled $17.0 million and was positively
impacted in the second quarter by improved international coal
prices and a weaker exchange rate.
December
September 2017
2017 quarter quarter H1 FY2018
(t) (t) (t)
Production
tonnages
Uitkomst ROM 125 108 140 501 265 609
Purchased ROM
to blend 45 313 35 414 80 727
170 421 175 915 346 336
Sales tonnages
Own ROM 80 677 94 271 174 948
Slurry used
for blending 36 489 17 201 53 690
Purchased ROM
to blend 48 266 31 371 79 637
165 432 142 843 308 275
Financial metrics
Revenue/t ($) 50.03 61.09 55.14
Production
cost/ saleable
tonnes ($) 43.20 43.47 43.32
------------------- -------------- --------- ----------
In order to meet the requirements of the South African Mining
Charter, the Company is in the process of selling an additional 21%
interest in Uitkomst to BEE shareholders on a vendor finance basis.
The transaction is expected to be concluded prior to 30 June
2018.
Makhado Coking Coal Project - Soutpansberg Coalfield (95% owned
- 69% post BEE transactions)
The Makhado Project recorded no LTIs during the Period.
The Directors of MC Mining approved the revised evaluation plan
for the Makhado 'Lite' project in September 2017, to unlock
near-term shareholder value from its flagship project. The plan
reduces capital expenditure and shortens the construction period to
12 months, with a 46 year LOM and potential for future expansion of
mining and processing if appropriate.
The Makhado Project has all the regulatory permits required to
commence mining but requires access to the key Lukin and Salaita
farms to confirm geotechnical information prior to the construction
of the colliery. These properties are subject to the South African
government's land claims processes and the Company anticipates that
this will be resolved in H2 FY2018.
During the Period, MC Mining engaged independent mining experts
Minxcon to complete a CPR on the Makhado Project. The results were
received in January 2018 and confirmed the figures relating to
costs, capital expenditure and returns previously released to the
market. The Company has commenced hard coking and export thermal
coal off-take discussions with various parties and expects that a
substantial portion of Makhado's hard coking coal will be sold
locally with the balance sold on international markets.
The South African Government is actively facilitating industrial
development and gazetted the South Africa Energy Metallurgy Special
Economic Zone ("SEZ") 40km south of Musina, during September 2017.
The SEZ will include a coal-fired power plant, coking coal
batteries as well as steel and stainless steel plants. The Company
anticipates that the SEZ could take three to five years to
develop.
Vele Coking and Thermal Coal Colliery - Limpopo (Tuli) Coalfield
(100% owned)
The Vele Colliery remained on care and maintenance throughout
the Period and no LTIs were recorded during this time.
The original Vele Colliery IWUL was renewed in January 2016 for
a further 20 years, and also amended in line with the requirements
for the colliery's Plant Modification Project. Post the Period-end,
in February 2018, the South African Department of Water and
Sanitation granted the IWUL amendment, completing the suite of
regulatory authorisations required for the Vele Colliery.
The significant political changes that occurred towards the end
of the Period, resulting in strengthening of the rand against the
dollar, led to an impairment indicator on the Vele carrying value.
This rand strength, coupled with a delay in production due to the
Makhado Project focus, resulted in the carrying value of Vele being
impaired by $87.5 million during the Period.
Greater Soutpansberg Project (MbeuYashu) - Soutpansberg
Coalfield (74% owned)
The MbeuYashu Project recorded no LTIs during the six
months.
Corporate
Mooiplaats Disposal
MC Mining has made significant progress in the restructuring of
its balance sheet, including the sale of the underground Mooiplaats
Colliery that had been on care and maintenance since 2013. The
colliery was sold to Mooiplaats Coal Holdings Proprietary Limited
for $12.9 million (ZAR179.9 million). The purchase price will be
settled as follows:
-- $4.8 million (ZAR67.0 million) was received in November 2017; and
-- The balance, being $9.1 million (ZAR112.9 million), to be
settled in ten equal quarterly instalments, subject to the
incorporation of Portions 2, 3 and the remaining extent of the farm
Klipbank 295 IT into the Mooiplaats Colliery New Order Mining
Right.
Corporate Actions
At the November 2017 AGM, shareholders approved the renaming of
the Company to reflect its potential growth, particularly of its
hard coking (metallurgical) coal prospects. This resulted in the
Company changing its name to 'MC Mining Limited'. This was
accompanied by a change in the Company's ticker on the Australian
Securities Exchange and AIM Market of the London Stock Exchange to
'MCM', while MC Mining's shares trade under the MCZ ticker on the
Johannesburg Stock Exchange. Shareholders also approved a 20-for-1
consolidation of the Company's issued capital and the Consolidation
was completed in December 2017.
Financial review
The loss for the six-month Period was $97.34 million (H1 2017:
loss of $12.97 million) or 78.39 US cents per share compared to a
loss of $12.97 million, or 13.68 US cents per share for the prior
corresponding period. The loss for the Period includes:
-- Revenue from Uitkomst of $17.0 million (H1 FY2017: nil) and
cost of sales of $14.36 million (H1 FY2017: NIL), resulting in a
gross profit of $2.7 million (2017: nil);
-- An impairment of the Vele assets of $87.5 million and the
reversal of a $3.1 million prior year impairment arising from the
sale of Mooiplaats;
-- In the comparative period, intangible assets were impaired by
$10.6 million due to the Company deciding not to renew its port
capacity through the Matola terminal;
-- De-recognition of the Vele deferred tax asset of $5.6 million
and an income tax expense of $1.3 million;
-- Net foreign exchange losses of $1.3 million (2016: gain of
$2.9 million) arising from the translation of inter-group loan
balances, borrowings and cash due to changes in the ZAR:US$ and
A$:US$ exchange rates during the period;
-- Employee benefit expense of $3.9 million (H1 FY2017: expense: $2.5 million)
-- Other expenses of $2.7 million (H1 FY2017: $2.3 million); and
-- Depreciation of $0.2 million (H1 FY2017: $0.2 million) and
amortisation of nil (H1 FY2017: $0.4 million).
Authorised by
David Brown
Chief Executive Officer
For more information contact:
David Brown Chief Executive Officer MC Mining Limited +27 10 003 8000
Brenda Berlin Chief Financial Officer MC Mining Limited +27 10 003 8000
Tony Bevan Company Secretary Endeavour Corporate Services +61 08 9316 9100
Company advisors:
Financial PR
Jos Simson/ Gareth Tredway (United Kingdom) Tavistock +44 20 7920 3150
Ross Allister/Richard
Crichton/James Bavister Nominated Adviser and Broker Peel Hunt LLP +44 20 7418 8900
Charmane Russell/Olwen Auret Financial PR (South Africa) R&A Strategic Communications +27 11 880 3924
Investec Bank Limited is the nominated JSE Sponsor
About MC Mining Limited:
MC Mining Limited (MCM) is an AIM/ASX/JSE listed coal
exploration, development and mining company operating in South
Africa. MCM's key projects include the Uitkomst Colliery
(metallurgical coal), Makhado Project (coking and thermal coal).
Vele Colliery (coking and thermal coal), and the Greater
Soutpansberg Projects (MbeuYashu).
Forward-Looking Statements
This Announcement, including information included or
incorporated by reference in this Announcement, may contain
"forward-looking statements" concerning MC Mining Limited (MCM)
that are subject to risks and uncertainties. Generally, the words
"will", "may", "should", "continue", "believes", "expects",
"intends", "anticipates" or similar expressions identify
forward-looking statements. These forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors
that are beyond MCM's ability to control or estimate precisely,
such as future market conditions, changes in regulatory environment
and the behaviour of other market participants. MCM cannot give any
assurance that such forward-looking statements will prove to have
been correct. The reader is cautioned not to place undue reliance
on these forward looking statements. MCM assumes no obligation and
do not undertake any obligation to update or revise publicly any of
the forward-looking statements set out herein, whether as a result
of new information, future events or otherwise, except to the
extent legally required.
Statements of intention
Statements of intention are statements of current intentions
only, which may change as new information becomes available or
circumstances change.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCFKQDKOBKDFND
(END) Dow Jones Newswires
March 15, 2018 03:00 ET (07:00 GMT)
Mc Mining (LSE:MCM)
Historical Stock Chart
From Apr 2024 to May 2024
Mc Mining (LSE:MCM)
Historical Stock Chart
From May 2023 to May 2024