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(Alliance News) - MC Mining Ltd on Monday said it is in discussions to extend its loan facilities with the Industrial Development Corp of South Africa Ltd, which were provided to develop Makhado hard coking coal project in the Limpopo province of South Africa.
The Australian coal miner said the drawdown of ZAR160 million plus accrued interest were due for repayment by the end of November, but the company has submitted a formal application to extend the repayment period and the Industrial Development Corp has acknowledged this application.
The negotiations between the parties are ongoing to align the repayment of the first drawdown - ZAR120 million - with the positive cash flows generated by the project, whilst repaying the second drawdown of ZAR40 million from the proceeds raised to construct phase 1.
MC Mining said it is confident that a satisfactory position can be reached with the Industrial Development Corp.
In the unlikely event that the parties cannot reach agreement on further deferment terms, the financing documentation allows for the debt to be converted into equity.
MC Mining said Makhado has a life of mine in excess of 46 years and robust fundamentals, resulting in compelling economics. The phased development of Makhado is expected to deliver positive returns for shareholders and will position MC Mining as South Africa's pre-eminent hard coking coal producer.
"The company has progressed initiatives to secure the funding for the construction of phase one and anticipates that these will be completed in Q1 2021," said MC Mining Chief Executive Brenda Berlin.
"The development of the Makhado project is supported by favourable long-term hard coking coal markets and forecast growth in worldwide steel demand, driven by global economic development and urbanisation. Phase 1 has an internal rate of return in excess of 40% and a payback of less than 2.5 years," added Berlin.
MC Mining shares were untraded in London on Monday, last closing at 7.02 pence each, while in Johannesburg, the stock was trading flat at ZAR2.00 a share.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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