(Sharecast News) - MC Mining updated the market on its second quarter ended 31 December on Friday, reporting that one lost-time injury was recorded during the period at the Uitkomst metallurgical and thermal coal colliery, up from nil in the first quarter.The AIM-traded firm said Uitkomst Colliery run of mine coal production decreased to 112,562 tonnes from 140,501 tonnes year-on-year, due to continued equipment availability issues, incorporating ex-mining contractor staff into new systems and process challenges following the transition to owner mining in August.A number of shifts were lost due to those issues, and corrective action had been implemented, with the board reporting that improved production was expected in the third quarter of 2019.The reduction in run-of-mine coal production resulted in sales of metallurgical, high quality and blended thermal decreasing to 67,606 tonnes from the comparative period's 94,271 tonnes, MC Mining said.As expected, no coal was purchased from third parties due to supply contracts expiring in 2018, down from 35,414 tonnes purchased a year prior.Favourable thermal coal prices resulted in an average revenue per saleable tonne of $91.25, rising from $61.09 per tonne.MC Mining reported the beginning of plant modifications at Uitkomst to facilitate the production of an additional high ash, coarse discard product.It also reached agreement on the terms and conditions for the acquisition of the Lukin and Salaita properties, the remaining two key surface rights required for the Makhado hard coking and thermal coal project.A coal purchase agreement was also reached with Huadong Coal Trading Center Company, a Chinese state-owned enterprise, for the off-take of up to 450,000 tonnes per annum of hard coking coal to be produced by the Makhado Project.The board confirmed the completion of a large diameter borehole drilling programme on the Makhado Project area, which confirmed the plant front-end engineering and design criteria.The South African Department of Mineral Resources (DMR) granted a mining right for MC Mining's 74%-owned Chapudi coking and thermal coal project during the period as well - one of the three projects comprising the company's longer-term Greater Soutpansberg Project situated in the Soutpansberg Coalfield of the Limpopo Province.The Vele coking and thermal coal colliery remained on care and maintenance during the quarter.On the financial front, a ZAR 20m (£1.11m) ABSA Bank primary lending facility was secured by Uitkomst during the quarter.Available cash at quarter-end stood at $5.4m, down from $10.4m at the end of September, with restricted cash of $0.03m.MC Mining reported that hard coking coal prices remained above the long-term pricing expectations, while South African API4 thermal coal prices softened somewhat, but remained above $90 per tonne during the period.The board also reported that S=satisfaction of the conditions for the acquisition of the Lukin and Salaita had occurred since period end, resulting in the transfer of the properties to Baobab Mining & Exploration, the owner of the Makhado Project."We made significant progress on our Makhado Project milestones during the quarter, including agreeing the terms to acquire key surface rights and an off-take agreement for approximately half of the Makhado 'Lite' HCC production," said MC Mining chief executive officer David Brown."The acquisition of the Lukin and Salaita properties completes the suite of surface rights required for Makhado and clears a major hurdle to the development of the project."South Africa is traditionally a producer of thermal coal and currently has no significant HCC production."Brown said the the signing of the HCC off-take agreement with HDCTC reaffirmed Makhado's "world-class" coal qualities, and reflected the international appetite for that type of coking coal."Export sales stand to positively contribute to the national balance of payments and positions MC Mining as South Africa's pre-eminent producer of high-grade metallurgical coal."Negotiations for the sale of the remaining HCC as well as the thermal coal are at an advanced stage while funding initiatives are also progressing and we anticipate finalising all off-take agreements by the end of June 2019."The granting of the mining right for the Chapudi Project is a further step in unlocking value from MC Mining's significant coking and thermal coal assets and the GSP is positioned to be a potential long-term coal supplier to the planned Musina-Makhado SEZ."The Mopane and Generaal Project mining right applications were at an advanced stage, David Brown explained, with the company anticipating that those would be granted in the near future."Once the full suite of mining rights have been granted, we will commence with the various studies required for the water and environmental regulatory approvals."The mining operations at Uitkomst were insourced during August, and the integration of the approximately 340 staff as well as equipment and systems continued during the quarter."The integration as well as the commissioning of additional equipment affected ROM production and this will improve during the March 2019 period."MC Mining also began construction of the coarse discard plant modifications during the quarter, Brown said, with that expansion expected to yield an additional 40,000 tonnes of saleable product per year.
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