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(Alliance News) - MC Mining Ltd said Monday its subsidiary secured a "key" USD17.5 million loan from the Industrial Development Corp of South Africa Ltd to develop the first phase of its Makhado hard coking and thermal coal project.
Baobab Mining & Exploration - in which MC holds a 69% stake - will be allowed to draw down the USD17.5 million loan from June 2021, with the loan maturing seven years after draw down. Repayments will only occur 24 months after the initial draw down.
Baobab will use the proceeds to develop the west pit at Makhado as well as to modify the Vele Colliery processing plant.
Amongst the conditions required to finalise the funding, MC will have to raise a minimum of ZAR200 million - or USD14 million - through an equity fundraise. The firm must also settle its current USD13.2 million loan facility with IDC.
MC expects to complete the fundraise in "due course" and for construction at Makhado to begin in the third quarter of 2019. Construction is expected to take nine months, with first production anticipated a month later.
MC explained the loan was a "key" component of the first phase of Makhado allowing it to both settle its existing debts and fund the progress of the project.
Shares in MC Mining were untraded in both London and Johannesburg, last having last closed at 43.50 pence in London and ZAR8.02 in Johannesburg.
