REG - MC Mining Limited - Extension of Coal Sales & Marketing Agreement

MC MiningAnnouncement

20/12/2022 15:00

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RNS Number : 3672K  MC Mining Limited  20 December 2022

ANNOUNCEMENT
20 December 2022

 

EXTENSION OF THE UITKOMST COAL SALES & MARKETING AGREEMENT

RELATED PARTY TRANSACTION

 

MC Mining Limited (MC Mining or the Company) is pleased to announce a
six-month extension (Extension) of the July 2022 Coal Sales & Marketing
Agreement (Marketing Agreement or the Agreement) between the Company's
subsidiary Uitkomst Colliery Proprietary Ltd (Uitkomst Colliery or Uitkomst)
and Overlooked (Proprietary) Limited (Overlooked). The Marketing Agreement was
due to expire on 31 December 2022 and has now been extended to 30 June 2023,
with the key terms of the Marketing Agreement remaining.

 

The prevailing anti-fossil fuel sentiment and invasion of Ukraine earlier in
2022 has resulted in a global energy shortage and record international thermal
coal prices. The coal sold between July and November 2022 under the terms of
the Agreement, realised an average free-on-board price of $237/t,
significantly higher than domestic coal sales prices.

 

The salient features of the Marketing Agreement and the Extension thereof are:

·    contract now expiring in June 2023;

·    from 1 January 2023, sale of a minimum of 15,000t of Uitkomst coal
per month at API4-linked, US dollar denominated prices;

·  Overlooked is responsible for the transportation, stockpiling and export
of the coal at port and will receive a market related commission; and

·  Overlooked charges a competitive marketing fee of 5% of the sales price,
which is reasonable considering competing proposals received by Uitkomst, for
providing access to the international market.

Related Party Transaction

The Extension is deemed a related party transaction under the AIM Rules for
Companies due to Mr Matthews Senosi (a Non-Executive Director and Substantial
Shareholder (as defined by the AIM Rules) of the Company) being the Chief
Executive Officer and majority shareholder of Overlooked. The independent
directors of the Board of MC Mining, being those directors other than Mr
Senosi, having consulted with Strand Hanson Limited, the Company's Nominated
Adviser, consider the Extension to be fair and reasonable insofar as the
Company's shareholders are concerned.

Godfrey Gomwe, Managing Director and Chief Executive Officer of MC Mining,
commented:

"Uitkomst produces high quality coal but does not produce sufficient volumes
to fill a ship on a monthly basis and the partnership with Overlooked has
generated significant benefits for Uitkomst, facilitating an export route to
market and access to higher international thermal coal prices. The sale of the
initial 120,000t is not expected to be completed by the end of December 2022,
mainly due to shipping delays, with 36,764t currently stockpiled at the
harbour and the remaining 11,281t at Uitkomst. The Uitkomst Colliery continues
to supply coal to the local market, but at reduced volumes."

 

Godfrey Gomwe

Managing Director and Chief Executive Officer

This announcement has been approved by the Company's Disclosure Committee.

All figures are in United States dollars unless otherwise stated.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014, as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 (as amended).

 

 

 For more information contact:
             Tony Bevan                  Company Secretary                                             Endeavour Corporate Services          +61 08 9316 9100
             Company advisors:
             James Harris / James Dance  Nominated Adviser                                             Strand Hanson Limited                 +44 20 7409 3494

             Rory Scott                  Broker (AIM)                                                  Tennyson Securities                   +44 20 7186 9031
             Marion Brower               Financial PR (South Africa)                                   R&A Strategic Communications          +27 11 880 3924
             Investec Bank Limited is the nominated JSE Sponsor

About MC Mining Limited:

 

MC Mining is an AIM/ASX/JSE-listed coal exploration, development and mining
company operating in South Africa. MC Mining's key projects include the
Uitkomst Colliery (metallurgical and thermal coal), Makhado Project (hard
coking coal), Vele Colliery (semi-soft coking and thermal coal), and the
Greater Soutpansberg Projects (coking and thermal coal).

 

All figures are denominated in United States dollars unless otherwise stated.
Safety metrics are compared to the preceding quarter while financial and
operational metrics are measured against the comparable period in the previous
financial year. A copy of this report is available on the Company's website,
www.mcmining.co.za (http://www.mcmining.co.za) .

 

 

 

 

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