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MC Mining Announces Debt Funding Secured for Phase 1 of The Makhado Hard Coking Coal Project

Coal News - Published on Wed, 17 Jul 2019

Image Source: Makhado - MCMining Limited
MC Mining Limited announced the approval by the Industrial Development Corporation of South Africa Limited Credit Committee of a term loan facility to fund the construction of Phase 1 of the Makhado hard coking coal project. The Term Loan reaffirms the economics of the Makhado Project and follows the conclusion of off-take agreements for the coal to be produced by Phase 1. Proceeds of the Loan will be utilised to develop the west pit and modify the existing Vele Colliery processing plant, with construction expected to take nine months followed by first coal production in month ten.

The Makhado Project is 69% owned by MC Mining's subsidiary Baobab Mining & Exploration Ltd with the IDC having a 5% interest and, in compliance with South African black economic empowerment requirements, seven local communities own 20% and 6% is held by a black industrialist.

The salient features of the Term Loan are, subject to documentation:

1. The IDC will advance USD 17.5 million to MC Mining

2. Draw-down can take place any time before 30 June 2021 and the Loan will endure for a period of seven years following draw-down

3. Coupon of the South African Prime interest rate currently 10.25% plus a margin that reflects the significant progress made on Makhado as well as the increased confidence that the IDC has in the execution of the project

4. Capital repayments will only commence 24 months after the first draw-down and will be repaid in 20 equal quarterly instalments.

The Loan is subject to various conditions precedent including:

1. MC Mining issuing additional equity to shareholders for a minimum of USD 14.3 million

2. Settlement of the existing 2017 loan facility between the IDC, MC Mining and Baobab, which at 30 June 2019 amounted to USD 13.2 million and termination of all agreements in this regard.

The security for the Term Loan includes:

1. MC Mining, Baobab and Limpopo Coal Company Ltd, the owner of the Vele Colliery, standing as sureties

2. Baobab and Limpopo's assets pledged as security for the Loan.

Source :

Posted By : Ratan Singh on Wed, 17 Jul 2019
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