MC Mining reports production grew ahead of lockdown
Production in the three months to end-March rose 12% year on year, despite effect of the lockdown starting on March 26
MC Mining said on Friday coal production at its Uitkomst mine rose by double digits in the three months to end-March, despite slightly fewer days of production due to the start of SA’s lockdown.
Coal production rose 12% to 127,122 tonnes in the quarter, with the lockdown reducing this number by 8,000 tonnes. The group said the average price for premium hard coking coal had risen 8% when compared with the quarter to end-December.
MC Mining relies on the Uitkomst mine for cash generation, but its priority is its flagship Makhado project, which will produce coking coal and thermal coal once production begins.
In the company’s year to end-June 2019, Uitkomst transitioned to an owner-operated colliery after the transfer of underground mining contractor Khethekile Mining’s 340 staff and equipment to MC Mining.
The company said in 2018 that it had spent R65m on acquiring the equipment to solve issues regarding the availability of the contractor’s equipment.
“Uitkomst continued to generate pleasing results with coal prices trending higher than the first half of the current financial year,” said CEO Brenda Berlin.
The group had put contingency programmes in place, Berlin said, and the company continued to interact with potential domestic and international investors to secure the balance of funding required to commence construction at Makhado.
In 2019, the Industrial Development Corporation had approved a loan facility of R245m for the Makhado project, and the group expects to secure the rest of the required funding for the first phase of the project in the course of 2020.
The lockdown resulted in MC Mining implementing a no work, no pay policy for nonessential staff, but the group said it had successfully applied for a portion of wages to be paid by the Temporary Employee Relief Scheme (Ters). The miner said it would distribute the funds to eligible employees during April.
In afternoon trade on Friday, MC Mining's share had jumped 18.75% to R1.90, although this is not an unusual move the group, which has a market capitalisation of R268m.
The group's share price has fallen 70.36% so far in 2020, compared to a 10% fall for the JSE's resource index.
Update: April 24 2020
This article has been updated with additional information