MC Mining CEO David Brown. Picture: ROBERT TSHABALALA
MC Mining CEO David Brown. Picture: ROBERT TSHABALALA

Junior coal miner MC Mining’s share price jumped as much as 12% to R14 on Monday after the company reported additional progress in getting its flagship Makhado project in Limpopo under way.

The successful acquisition of two key pieces of land puts the company on track to begin production at Makhado by the end of next year, MC Mining CEO David Brown said on Monday. The more than tripling of the company’s share price in the past three months would likely assist in discussions with funders for the $100m project, he said.

Graphic: DOROTHY KGOSI
Graphic: DOROTHY KGOSI

“We had always maintained [the previous share price] was not reflective of the value of the company, or an appropriate valuation taking into account our underlying reserve base,” he said.

MC Mining is banking on its flagship Makhado project, which will produce coking coal and thermal coal for domestic use and export once production begins. 

The company has now completed its R70m acquisition of two properties for its projects after years of delays prompted by land claims and legal battles with the department of environmental affairs.

With these hurdles cleared, MC Mining hoped to have funding agreements in place by the company’s quarter to end-September, Brown said. Should this go to plan, production could begin towards the end of 2020 after a 12-month construction phase.

The company is still looking at a number of funding options,  Brown said. It was hoped any funding plan would get approval from the company’s board by the end of the year.

The company has held talks with a number of parties to acquire the hard coking coal and export-quality thermal coal the project will deliver, signing a marketing agreement with a Chinese firm in 2018 that covers half of the expected production.

The Makhado project is expected to produce up to 800,000 tons of hard coking annually as well as between 900,000 tons and 1-million tons of export quality thermal coal.

The group, formerly called Coal of Africa Limited, has struggled with legacy issues and high overhead costs. These persist, with the company continuing to seek out a second cash-generating asset. The company’s sole production comes from its Uitkomst colliery, which it bought from Pan African Resources late in 2017.

gernetzkyk@businesslive.co.za