MC Mining Limited (formerly Coal of Africa Limited) unveiled the results of its updated Life of Mine (LOM) plan and Coal Reserve estimate for the Makhado steelmaking hard coking coal project. The announcement reveals substantial improvements in mine life, annual production rates, and robust financial returns.
The updated LOM plan demonstrates a remarkable 27% increase in mine life and a 25% rise in the annual mine production rate. The plan also delivers a 53% surge in Proved and Probable Coal Reserves estimates, now standing at 106 million tonnes (Mt). These positive outcomes were achieved through detailed mine designs and the inclusion of all mineable portions of the East, Central, and West coal deposits.
In addition to extending the mine life and increasing production, the updated plan ensures conservative cost, macro-economic, and coal price assumptions. These factors contribute to the project’s solid financial returns and make it an attractive investment opportunity.
The Chief Executive Officer of MC Mining, Mr. Godfrey Gomwe, expressed his satisfaction with the results, stating, “The Makhado Project continues to progress on schedule in preparation for first coal production to no later than 18 months after construction starts. We are pleased to see a substantial increase in our Coal Reserves and consequently mine life at a much-improved annual production rate for saleable coal products.”
The updated LOM plan not only enhances production metrics but also includes several key financial indicators. It presents a 20% improvement in free cashflows, a 17% increase in the post-tax Net Present Value (NPV), and an internal rate of return (IRR) of 37%, along with an EBITDA margin of 30%.
The revised Coal Reserve estimate reveals a 53% increase from the previous estimation, reaching a total of 106 Mt. This increase translates to a 64% surge in salable steelmaking hard coking coal (HCC) and a 57% rise in thermal coal (TC). These substantial reserve increases contribute to the overall viability and longevity of the Makhado Project.
Alongside the updated plans, MC Mining has made steady progress with critical early works activities. These activities align with the project’s Implementation Plan, which includes the commencement of power supply infrastructure, construction of necessary access routes, and the procurement of key long-lead items. The company is also in the process of selecting mine-operating contractors.
The Makhado Project is 67.3%-owned by MC Mining through its subsidiary, Baobab Mining & Exploration Pty Ltd (BM&E). The project aims to produce high-quality steelmaking hard coking coal (HCC) and thermal coal (TC) for both domestic and international markets.
With the positive outcomes and advancements achieved through the updated LOM plan, MC Mining is optimistic about the project’s future prospects. The company is currently in funding discussions to support the ongoing implementation of the Makhado Project mine-build, with completion expected in the second half of 2023.
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