Member Info for JRtandi

Since my last post the API4 futures now don't dip below $150/t until June 2025 (compared to March 2025 it was then).

There does appear to be a consensus forming that the higher prices will remain sticky for much longer.

Bozmo, if I'm not mistaken, once upon a time Vele was projected to deliver 5 million tonnes of saleable coking coal per year in a "phase 2". Do you know the backdrop re. why they moved focus on Makhado instead?

API Futures FOB Richards Bay (ARGUS-McCloskey) currently don't drop below 150$/t until March 2025, and don't drop below 125$/t until January 2026.

The development for Makhado is slated to take just 12 months to production so if all goes to plan then the major hurdle to get through will be completing financing for Makhado, which should resolve itself this month/quarter.

Once Makhado is producing then the coking coal alone should be a cash machine for MCM even in the leaner times.

If ArcelorMittal SA renews its 400t/pa offtake agreement for the coking coal then that's just a hop and a skip logistics wise (Makhado to Musina sidings) and at international prices to boot.

Thanks Bozmo.

Good write-ups would be helpful. I would wager that not many understand why MCM deserves a premium compared to its ZA peers because of its very long LOMs, large reserve & resource base and of course specifically the coking coal which should guarantee profits & resilience for decades to come. Valuation techniques like forward P/E etc don't do justice to MCM.

Phase 1 Makhado would deliver ~1Mt pa saleable coal, phase 2 nearly double that?

Nearby GSP could add ROM of ~16Mt pa?

Did they mention anything about GSP at the AGM? I don't know whether it's feasible but seems to me that if a JV partner could be found that it would make a lot of sense to go into a JV there (ideally free carry for MCM until BFS is delivered) and accelerate the project there.

Anyway, January could be another big month for news: Makhado detailed study update from Erudite, additional BOOT providers announced (to increase BOOT funding from current 60m ZAR committed in principel to the 600m odd ZAR they need) and of course the 31 January results update.

I believe Dendocept is a subsidiary of CITIC group.

Presumably AMSA will renew their 450kt per annum coking coal offtake agreement with MCM for Makhado? Would be win-win and cut out a lot of the logistics $$$ ?

Was looking a bit dicey for AMSA but they seem to be on track for a turnaround?

A thought occurred to me: Senosi has been a boon for the company (export sales agreement, subcontracting Vele) - but where is the other big beast, Dendocept, in all of this?

Interestingly, the 31 October 2022 RNS mentioned "potential coal prepayments" as part of the Makhado funding mix. Who could this be? Dendocept (the Chinese)?, Senosi? , AMSA? Any other likely candidates?

Bozmo - are you still around? Did you attend the AGM? Any thoughts re. recent developments?

Yes - the exec change was, for me, a game changer, I only regret not adding more at the time.

Our CEO having been Anglo American's COO for their thermal coal business in South Africa is very reassuring. The guy we are outsourcing Vele to seems to have some past link to Anglo American also.

Note that JCI Mining (linked to Senosi) will be one of the subcontractors.

Nene as chairman should open doors for us, you'd think?

The good thing about this share now is that there is *plenty* of news over the coming months, quite a but of it with rerate potential, imo.

Lack of news is always a killer on AIM so the forthcoming news flow should be reassuring to us.

Yep. Haohua put down $100m for just a 23.6% shareholding in 2012 which in today's money would value the company at ~ 90 pence.

There are several ways you can skin the cat re. valuation. Principal dependency of course where you stand on the future of coal prices and coal as a commodity itself.

A second factor re. upside and the crazy valuation window is just derived from fact that ZA miners are hugely undervalued right now - Thungela could easily be worth, what, three times current mcap just to be in line with its peers?

There's also the -arguably nonsensical- ESG discount factor. Seems to me we are witnessing the beginning of the pendulum swing back towards sanity on that alone. (Again, if you had listen to the ESG folk Thungela would have been worthless when it spun out).

So lots of factors at play right now which are each depressing shareprices all over the shop but it doesn't take much imagination to see a huge correction towards a more realistic valuation across the board.

By the end of Q1 I'd like to see us closer to 60p than where we finished today.

Could see further rocket boosters:

BOOT arrangement for Makhado agreed?

Makhado finance package complete & construction start? (should take only 12 months, I believe the long lead items have already been ordered this quarter using Rights Issue funds?)

GSP sale? These are exploration assets with >1 billion mineable tons in situ (>7.0 billion gross). BDO estimated low-preferred-high value of ~$50m-$65m-$85m, though I think they used very conservative future coal prices for that. From recent RNS: "the Company is in the process of re-assessing the carrying values of these projects given their longer-term development horizons and the current focus on other projects."

31st January financial report should be spectacular and historic?

March Interims

April quarter results - including first cash from Vele colliery?

Anyone want to do the sums?

The below are rough figures only, so dyor

Makhado ~1Mt pa saleable coal, about 50/50 HCC/thermal

Uitkomst ~400kt pa saleable, currently of which on an annualised basis 180kt is export thermal

Vele ~$8m pa clear profit (before tax)

GPS - in the H1 2021 interim these had a net book value of $53,852,683. They paid a lot more to acquire the assets ($75m for Chapudi alone).

Cash should already be flowing in next quarter:

"HOS has commenced recommissioning the Vele CPP and first coal sales are expected in Q1 CY2023 with the ramp-up to full production during Q2 CY2023."

Wahey!

I'm beginning to feel like Mystic Meg!

The agreement means MCM will get, roughly, $8m pa clear profit out of this?

Everything is falling into place - it's all so obvious, but when will the market catch on?

Rerate soon, surely?

MCM may need to put the quarterly financials on the board in order to start generating news outside the bubble.

Until then only anoraks like us may have a clear idea of what we really have here. But just imagine the market reaction if MCM were to post bumper profits for the quartely? Not only that - they could easily be outperforming in just one quarter what they have done in whole years since the start of the business?

Having ~70% of shares not in public hands could mean that if that happens it moves very quickly and very steeply indeed.

Right now we might feel quietly pleased that we are invested and know what we have in our hands while the market is still oblivious about it all?

Not sure what happened to formatting - hope this will be better:

Recap of further potential news imminent:

Vele colliery restart? If so, then if operations would be outsourced to Senosi then that would also fetch export prices? Could easily double the monthly tons exported?

Update on the detailed study for Makhado undertaken by Erudite ("Erudite expects to complete the study during December 2022.")

Update on Makhado BOOT providers ("This study is also required for potential additional BOOT funders to complete their assessments.")

Update on IDC's Mkahado funding contribution ("ZAR245 million (US$40.0 million) new facility from the IDC. This facility remains subject to due diligence and credit approval" - presumably the extension of the Uitkomst Sales agreement should help with the credit approval and the detailed study work/BOOT with the due diligence?)

Anything else anyone can see announced before the 31st January 2023 quarterly update?

Recap of further potential news imminent:Vele colliery restart? If so, then if operations would be outsourced to Senosi then that would also fetch export prices? Could easily double the monthly tons exported?Update on the detailed study for Makhado undertaken by Erudite ("Erudite expects to complete the studyduring December 2022.")Update on Makhado BOOT providers ("This study is also required for potential additional BOOT funders to complete their assessments.")Update on IDC's Mkahado funding contribution ("ZAR245 million (US$40.0 million) new facility from the IDC. This facility remains subject to due diligence and credit approval" - presumably the extension of the Uitkomst Sales agreement should help with the credit approval and the detailed study work/BOOT with the due diligence?)Anything else anyone can see announced before the 31st January 2023 quarterly update?

Excellent news. The next set of financial results should make for good reading!

Thanks Hectoperm.

Yes, it all seems to be coming together.

So many things have started to line up in recent years: water-use licences granted, Makhado surface rights, dismissal of environmentalist appeals, Generaal/Mopane mining right granted, Makhado land acquisition, two of some the biggest names in ZA for CEO/Chairman, export sales agreement...

Next Vele restart?

If they don't release some news before the Jan 31 quarter update I may yet self-combust.

Senosi-linked JCI Mining still recruiting for Vele Colliery:

Twitter dot com/comforttenyeko/status/1597559560377700353?t=L92DocBM7mRZg3kdfqPRJA&s=19

A job add for a safety officer at Vele colliery, closing date 5th December.

JCI MINING
SAFETY OFFICER.
EXPERIENCE AND REQUIREMENTS: • Grade 12(Matric), • Valid Driver’s License with own transport, • 5 years’ safety experience in the mining industry, • Be willing to work extended hours and take up standby duties, • Open cast

Earlier Senoisi bought a majority stake in a coal mining equipment supply/maintenance firm.

/ J A Engineering Works Proprietary
Limited (“JAE” or “Target Firm”) (“Proposed Transaction”)
The Commission has approved the proposed transaction whereby SGIH acquired a majority shareholding in JAE, without conditions. The primary acquiring firm is SGIH. The SGIH Group has a diverse range of business interests and primarily conducts the business of coal mining through opencast and underground coal mining operations in South Africa. The primary target firm is JAE. JAE manufactures and supplies underground mining equipment and provides servicing and repairing of both underground and surface (opencast) coal mining equipment.

Transaction was approved a few weeks. Senosi seems to have fingers in every coal pie: coal industry recruitment, coal mine outsourcing, coal trucking/logistics, coal mining...

"Senosi Group Investments Holdings Proprietary Limited ("SGIH")/ Sobotshane Investments
Proprietary Limited (“Sobotshane”). The Commission has approved the transaction whereby SGIH intends to acquire Sobotshane, without conditions. The primary acquiring firm is SGIH, a private company ultimately controlled by a historically disadvantaged
person. The Acquiring Group conducts the business of coal mining through both opencast and underground coal mining operations in South Africa. The primary target firm is Sobotshane. Sobotshane is a logistics services provider specializing in the transportation and handling of bulk commodities servicing largely the coal mining industry in South Africa with its fleet concentrated in the Mpumalanga Province. The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The Commission further found that the proposed transaction does not raise any public interest concerns."