IDC agrees to extend repayment date of MC Mining loan

Image: Sowetan

Repayment of a R160m loan was due at the end of November 2020, but is now due at the end of July, which MC Mining says is a show of support

Junior coal miner MC Mining, which is developing SA’s only hard coking coal mine, says the Industrial Development Corporation (IDC) has agreed to push back repayment of R160m in loans, with interest, until the end of July.

MC Mining, formerly known as Coal of Africa, says this is a show of support for its flagship Makhado coal project, which could see its first coal sales in the first half of 2022.

MC Mining’s currently relies on the Uitkomst colliery in KwaZulu-Natal for cash generation, but focus is on the Makhado project, which would be SA’s only producer of hard coking coal.

Distinct from thermal coal used in power stations, coking coal, and hard coking coal in particular, is a premium product used in steelmaking and for which there is no substitute.

The IDC had provided MC Mining with a R240m facility in 2017, and two drawdowns of a total R160m had resulted in the IDC becoming a 6.7% shareholder of the group’s subsidiary, Baobab Mining and Exploration, which owns the Makhado Project.

The repayment of the first two drawdowns had been due at the end of November 2020, with discussions about again rescheduling the repayment continuing.

“In the unlikely event that the parties cannot reach agreement on further deferment terms or the company does not repay the loan by the repayment date, the financing documentation allows for the debt to be converted into equity,” MC Mining said.

MC Mining needs R575m in funding for phase 1 of Makhado, saying on Wednesday it expects finalise discussions with potential funders for the remaining R130m it needs in the first quarter of 2021.

This would be followed by a nine-month construction period and first coal sales in the first half of 2022, said acting CEO Brenda Berlin.

In morning trade on Wednesday, MC Mining’s share was up 5% to R1.68, on track for its best day in about two weeks, and giving the group a market capitalisation of R259m.