Uitkomst Safety Setbacks and Coal Price Slump Challenge MC Mining’s Outlook

Safety and Operational Highlights

MC Mining Limited’s Q3 FY2025 activities report underscores a mixed operational landscape. The Makhado steelmaking hard coking coal (HCC) project continues to demonstrate exemplary safety performance, achieving a lost time injury (LTI) free quarter and extending its LTI-free streak to 727 days over 376,000 manhours. This milestone reflects the company’s ongoing commitment to zero harm as it advances construction and commissioning efforts.

Conversely, the Uitkomst Colliery experienced a setback with four LTIs during the quarter, up from one in the previous period. This has prompted the company to intensify intervention measures, including enhanced supervisor training and behaviour-based safety realignment, aiming to reverse this trend and improve operational safety standards.

Makhado Project Development Progress

Significant progress was made at Makhado, with the commencement of construction on the coal handling and preparation plant (CHPP), a critical infrastructure component scheduled for commissioning by December 2025. The company awarded the build, own, operate and transfer (BOOT) contract to Environmental and Process Technologies Proprietary Limited (Enprotec), who have mobilized onsite and begun construction.

Supporting infrastructure milestones include the completion of a temporary access bridge over the Mutamba River, enabling uninterrupted site access, and the erection of over 14 kilometres of overhead power lines, facilitating construction power supply. These developments position Makhado to become South Africa’s leading producer of hard coking coal, reducing the country’s reliance on imports.

Uitkomst Colliery Faces Production and Cost Pressures

Uitkomst Colliery’s run-of-mine (ROM) coal production declined by 13% to 101,101 tonnes compared to the same quarter last year, primarily due to narrower coal seam widths and reduced availability of underground mining equipment. Despite this, operational improvements boosted coal preparation plant yields from 60% to 73%, partially offsetting the production shortfall.

Sales volumes of high-grade coal fell 25% to 56,320 tonnes, with no middlings coal sold during the quarter. Production costs per saleable tonne surged 33% to US$93, reflecting the impact of lower volumes on unit costs. The company is actively pursuing cost reduction initiatives and has engaged Metalla Tutum Engineering Pty Ltd to identify further operational efficiencies.

Market Conditions and Financial Position

Coal prices remained subdued, with thermal coal averaging US$96 per tonne and premium steelmaking hard coking coal prices dropping sharply to US$187 per tonne from US$312 in the prior year quarter. These market headwinds continue to pressure revenue and margins.

On the corporate front, Kinetic Development Group Limited strengthened its stake by subscribing for shares worth US$20 million during the quarter, consolidating its controlling interest. The company also made significant loan repayments to the Industrial Development Corporation of South Africa Limited (IDC), including a ZAR10 million payment to extend loan maturity to June 2025 and a further ZAR100 million repayment.

Governance and Outlook

MC Mining appointed two new non-executive directors, Wang Lanlan (Lily) and Dr Huoxin Wang (Hevin), while An Chee Sin resigned from the board, signaling a refreshed governance structure aligned with the company’s strategic priorities.

Looking ahead, the company is focused on completing Makhado’s commissioning preparations, improving Uitkomst’s operational performance, and navigating the challenging coal price environment. With a cash position and facilities totaling US$9 million, MC Mining appears positioned to sustain its development trajectory while addressing near-term operational challenges.