21st Jul 2020 11:56
(Alliance News) - MC Mining Ltd on Tuesday said it has met the condition for its restructured loan agreement and will draw down ZAR40 million to advance its Makhado hard-coking coal project.
The loan agreement is with the Industrial Development Corp of South Africa Ltd, and the condition required MC Mining to obtain commitments for the issue of new equity amounting to ZAR15.0 million.
MC Mining said the new equity is to be issued at 105.56 cents, a 9% discount to its closing share price on Friday last week. It will result in the issue of around 14.2 million new company shares.
The IDC will receive around 1.1 million warrants, equivalent to a 0.8% stake in MC Mining, and its direct participation in Makhado will increase to 6.7% from 5.0%.
The ZAR40 million drawn down under the loan will be used both to advance Makhado and for general working capital.
Previously, MC Mining secured a ZAR245 million loan facility from the IDC, the first step in a ZAR535 million funding package to develop the first phase of Makhado. The company is in advanced talks for the balance of the funding needed, and construction is set to begin in the fourth quarter of of 2020 or first quarter of 2021.
The first phase has a nine-year life-of-mine and is expected to produce 540,000 tonnes of hard-coking coal per year plus 570,000 tonnes of "export quality thermal coal by-product".
Acting Chief Executive Brenda Berlin said: "The issue of the new equity to existing and new shareholders underlines the robust fundamentals and compelling returns of the Makhado project.
"This is a further significant step for MC Mining, and we will now focus on securing the balance of the phase 1 funding, delayed by the Covid-19 lockdown. The company will also continue negotiations to defer the November 2020 repayment of existing debt owing to the IDC until the Makhado project is generating positive cash flows.
Shares in MC Mining were down 2.8% at ZAR1.06 in Johannesburg on Tuesday but were up 1.7% at 6.10 pence in London.
By Anna Farley; [email protected]
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