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(Alliance News) - MC Mining Ltd said Monday it has agreed with restructure a ZAR240 million conditional loan with the Industrial Development Corp of South Africa Ltd, which was first secured in March 2017.
The facility was granted to develop the Makhado hard coking project and led to the IDC holding a 5% stake in MC Mining's subsidiary Baobab Mining & Exploration Pty Ltd, which owned the project itself.
MC Mining has already used ZAR120 million of the facility, with the second tranche remaining undrawn.
The company has been in advanced discussions to secure ZAR535 million, the capital and working capital needed to construct phase one of Makhado, which has a nine-year life-of-mine and is expected to produce 540,000 tonnes of coal and 570,000 tonnes thermal coal by-product.
Significant progress was made in March, including the signing of a further ZAR245 million loan facility. Now the IDC has agreed that MC Mining can drawdown ZAR40 million from the second tranche, while the loan facility remains part of the phase one funding package.
In return, the IDC will take up a further 1.7% interest in Baobab, and the agreement is conditional on MC Mining raising ZAR15 million in new equity.
"The company made significant progress in securing the capital required for phase one prior to the Covid-19 lockdown. The execution of the complete phase one composite funding package was delayed due to Covid-19 and the restructuring of the Initial IDC facility pursuant to the agreement gives the company the time it needs to conclude the funding process. The restructuring also delays the repayment of the first tranche and negotiations are ongoing to align this payment with the positive cash flows generated by Makhado," said Acting Chief Executive Brenda Berlin.
Shares in MC Mining were down 6.7% at 7.00 pence on Monday in London, while its Johannesburg shares were 8.6% lower at ZAR1.17.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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