Coal miner MC Mining has concluded a subscription agreement with Columbia Skies Holdings (CSH), which is owned by black industrialist Pitso Madibo, for 7.8-million ordinary MC Mining shares, or a 4.8% stake.
The CSH shares will be allotted in terms of the company’s ASX-approved capacity and will raise about R10-million, or $600 000, for MC Mining.
MC Mining, which is also listed on the JSE and the Aim, plans to use the funds for further development of the Makhado hard coking coal project, in South Africa’s Limpopo province.
Acting CEO Brenda Berlin explains that the company previously secured a R245-million, or $14.8-million, loan from the Industrial Development Corporation of South Africa, which made out a critical component in the Makhado Phase 1 debt/equity funding structure.
The company has been in discussions with various potential funders for the balance of the Phase 1 funding.
Phase 1 will see the mining of the west pit of Makhado, with coal being processed at the company’s existing nearby Vele Colliery processing plant.
Phase 1 includes modifications to the Vele plant, with about two-million tonnes a year of additional coal to be sent to Vele for processing.
Following a nine-month construction period, Makhado will be the only significant hard coking coal mine in South Africa.
Phase 2, which will follow in due course, will involve mining of the east and central pits at the project, as well as a Makhado processing plant and related infrastructure to produce four-million tonnes a year of run-of-mine coal, yielding between 1.6-million and 1.8-million tonnes of saleable product.
The investment by CSH ensures that MC Mining has the necessary resources to complete the composite funding package by the end of this year. It will also provide working capital for the initial construction period planned during the first half of next year.
Read More: MC Mining raises $600 000 for Makhado’s development