MC Mining raises R86m in proposed share subscription
The company has been battling to secure enough funding for Makhado primarily because of growing reluctance by financial institutions to fund climate-polluting projects
Junior coal miner MC Mining, which has been struggling to secure funding for its flagship coal project in Limpopo, plans to raise R86m by issuing shares to privately owned investment company.
MC Mining said on Tuesday it would issue 38.4-million new ordinary shares in an initial subscription to Senosi at R1.20 each, raising R46m in equity as part of the first tranche.
The SA-based Senosi Group Investments Holdings has interests in coal mining, contract mining, commodity trading, gold mining, energy, engineering and property
The first tranche saw Senosi owning 20% of MC Mining's shares. The second tranche of R40m will increase its interest to 31.71%, which requires shareholder and regulatory approvals in SA and Australia, where it listed , respectively.
The junior miner has also appointed an independent expert to establish the fairness of the deal to issue shares, at the 7.1% premium to the closing price of R1.12 on the JSE on Monday.
The latest news came a day after MC Mining received a reprieve from Industrial Development Corporation (IDC), pushing out the repayment of R160m in loans plus interest to November.
MC Mining was initially meant to honour its financial obligations in November 2020, but that was pushed out to July 2021 and then to January 31.
The company has been battling to secure enough funding to get the Makhado project off the ground, primarily because of growing reluctance by financial institutions to fund climate-polluting projects.
Companies and businesses are under pressure from their shareholders and environmental activist groups to pivot to environmentally friendly products. But some analysts have cautioned that the world will still rely on coal and other fossil fuels for decades to come given the limited capacity in renewable energy.
MC Mining, which was formerly known as Coal of Africa, said a number of parties were continuing their due diligence review for providing the balance of the funding (about R500m) required for the Makhado project, which was meant to see its first coal sales during the first half of 2020.
However, the company said it was exploring several alternative strategies to raise additional funding including, but not limited to, the issue of new equity for cash in MC Mining or subsidiary companies, or further debt funding.
MC Mining currently relies on the Uitkomst colliery in KwaZulu-Natal for cash generation, but the focus is on the Makhado project, which would be SA’s only producer of hard-coking coal.
Distinct from thermal coal used in power stations, coking coal, and hard-coking coal in particular, is a premium product used in steelmaking.
MC Mining shares, which are not highly tradeable, were flat at R1.12 on Tuesday, giving it a market valuation of about R177.5m.
mahlangua@bdlive.co.za