Impairment widens MC Mining loss
BUSINESS LIVE / 16 MARCH 2018 - 06:45 / ALLAN SECCOMBE
A hefty $87.5m impairment against its suspended Vele colliery pushed MC Mining, formerly Coal of Africa Ltd (CoAL), into a deep interim loss, overshadowing the inflow of revenue and a gross profit stemming from its purchase of the Uitkomst Colliery.
MC Mining, which changed its name and conducted a share consolidation to deal with the legacies of its years as CoAL, reported a loss for the six months to end-December of $97m versus a $13m loss in the prior year period.
Unlike the previous period when it had no revenue, MC Mining reported income of $17m from the sale of coal from Uitkomst, a thermal coal mine in which it has a 91% stake and plans to top up its 5% black ownership levels by 21 percentage points before the end of its financial year in June through a vendor financed structure.
MC Mining reported gross profit of $2.7m for the interim period. The company will receive $8m in 10 quarterly payments from the sale of its Mooiplaats colliery.
At Uitkomst, MC Mining has to spend capital to develop a horizontal tunnel into an extension of the coal deposit and it has applied for an amended water use licence to start the work.
In the interim period, MC Mining generated 346,336 tonnes, of which 265,609 tonnes were from Uitkomst and the balance from third parties for blending purposes.
Production at Vele, a coking and thermal coal mine in northern Limpopo, has been delayed by a further two years because MC Mining is focusing on bringing its Makhado deposit into production and there was no time for Vele to coincide with the Musina-Makhado special economic zone.
MC Mining has held talks with a number of parties to acquire the hard coking coal and export-quality thermal coal the project will deliver. The company expects that most of the hard coking coal will be sold locally.
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