MC Mining gets go-ahead on IDC loan


MC Mining gets go-ahead on IDC loan


Published Date: 2020-07-22 | Source: Stephen Gunnion | Author: Stephen Gunnion

MC Mining gets go-ahead on IDC loan

The company says it will now focus on securing the balance of Phase 1 funding for its Makhado Project following lockdown delays.

MC Mining will go ahead and draw down a further R40 million loan from the Industrial Development Corporation (IDC) to help fund its Makhado hard coking coal project in Limpopo. That's after it managed to secure commitments for the issue of R15 million in new equity, one of the conditions of the IDC loan agreement.

The new shares will be issued at a 9% discount to the company's closing price last Friday. The IDC will also receive an estimated 1.1 million warrants, equal to 0.8% of MC Mining's issued shares, while its direct participation in Makhado will increase to 6.7% from 5%.

With SA producing limited quantities of high-quality metallurgical coal, MC believes the development of Makhado will make it the pre-eminent producer of hard coking coal, which trades at a significant premium to thermal coal and is a key ingredient for making steel.

The company previously secured a R245 million loan facility from the IDC as an initial step in the R535 million composite debt/equity funding package it needs to develop Phase 1 of Makhado. It said it was in advanced discussions for the balance of the funding required and construction was anticipated to commence in the final quarter of this year or early next year. Phase 1 has a nine-year life-of-mine and is forecast to produce 540,000 tonnes of hard coking coal annually as well as 570,000 tonnes of an export quality thermal coal by-product.

The company said it would also continue negotiations to defer the repayment of existing debt owing to the IDC until Makhado was generating positive cash flows.

Its shares rose 7.3% to R1.17 yesterday.


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