(Alliance News) - MC Mining Ltd said Wednesday it had reached a "major milestone" with the signing of an off-take agreement for its Makhado hard coking and thermal coal project with ArcelorMittal South Africa Ltd.
The deal will see ArcelorMittal SA buying at least 350,000 tonnes of hard coking coal per year from Makhado. ArcelorMittal SA will also have the right to buy a further 100,000 tonnes per year. Prices will be calculated on a monthly basis and will be on a free-on-rail basis.
The agreement will last for either 10 years or the life of the phase one project at Makhado, whichever is the shortest.
"The signing of the phase one HCC off-take agreement with AMSA is a massively positive step for Makhado," MC Chief Executive Officer David Brown said. "MC Mining is now positioned to become South Africa’s pre-eminent producer of high-grade metallurgical coal and the Makhado coking coal will partially replace coking coal currently imported."
"The phased development of Makhado reduces execution risk by utilising the existing Vele Colliery processing facility as well as previously tested logistics infrastructure and generates a significant number of employment opportunities in the Limpopo province," Brown added. "The agreement, together with the announcement in April 2019 of the phase one thermal coal off-take agreement, reaffirms the world-class quality of the Makhado coal and satisfies a key requirement for funders."
"Negotiations for a composite debt and equity funding arrangement continue," Brown continued. "We anticipate that these processes will be completed in the third quarter of 2019, with construction of phase one of our flagship Makhado project commencing later in the same period."
Mc Mining (MCM)