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MC Mining Reports Higher Loss as Coal Prices Fall

Coal News - Published on Wed, 18 Mar 2020

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MC Mining Limited has provided its reviewed interim financial report for the six months ended 31 December 2019. MC Mining Acting CEO Brenda Berlin said “The optimisation initiatives implemented at the Uitkomst Colliery during the Period yielded very positive results with ROM coal production increasing by 11%. The initiatives also led to a more predictable production profile and notwithstanding revenue being adversely affected by the 30% decline in API1 coal prices, Uitkomst was cash generative for the Period. The colliery also undertook a review of its cost base to ensure that costs are aligned to its production profile and the cost per ROM tonne was 22% lower than H1 FY2019. The Company has completed significant milestones required for the development of our flagship, fully-permitted Makhado Project, facilitating the continuation of Phase 1 funding initiatives. Following this, discussions with potential funders for the balance are progressing and we anticipate that this process should be completed in H1 CY2020, with construction commencing in Q3 CY2020. The completion of Phase 1 will result in MC Mining being the pre-eminent South African producer of hard coking coal.”

Operational Review

The high-grade Uitkomst metallurgical and thermal coal mine regrettably recorded seven lost-time injuries during the Period (FY2019 H1: one LTI). As a result, the Company introduced a mandatory safety re-training programme which all staff have participated in

Uitkomst’s run-of-mine coal production pleasingly increasing 11% compared to H1 FY2019 period (262,696 tonnes vs. 237,715 tonnes) as a result of optimisation initiatives and changes in mine management

Sales of high-grade metallurgical and thermal coal derived from Uitkomst ROM coal of 147,234 tonnes (H1 FY2019:157, 52 KT)

Vele semi-soft coking and thermal coal colliery remained on care and maintenance with its processing plant to be refurbished and recommissioned as part of Phase 1 of the Makhado Project

The South African Department of Mineral Resources and Energy granted a mining right for the 74%-owned Generaal coking and thermal coal project, one of the three projects comprising the Company’s Greater Soutpansberg Project

Financial Review

The loss for the Period was USD 7.1 million as compared to a loss of USD 3.6 million for H1 FY2019;

The 30% decline in API1 coal prices resulted in revenue decreasing to USD 11.k million (FY2019 H1: USD 15.2 million) and despite a reduction in the cost of sales (USD 11.1 million vs USD 12.3 million), gross profit declined to USD 0.3 million (FY2019 HI: USD 2.9 million)

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Posted By : Rabi Wangkhem on Wed, 18 Mar 2020
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