MC Mining Secures US$9.94 Million Convertible Note to Advance Makhado Project
MC Mining has locked in nearly US$10 million through convertible promissory notes from its major shareholders, targeting the completion and ramp-up of its flagship Makhado hard coking coal project in South Africa.
- US$9.94 million unsecured convertible notes arranged
- Funding aimed at Makhado project construction and commissioning
- Notes bear RBA rate plus 3% interest, mature in 12 months
- Conversion to shares subject to shareholder approval
- Backing from controlling and significant minority shareholders
Convertible Notes Provide Flexible Funding for Makhado
MC Mining Limited (ASX/JSE: MCM) has secured a US$9.94 million injection through unsecured convertible promissory notes from its controlling shareholder Kinetic Development Group (KDG) and significant minority holder Eagle Canyon. The funding is earmarked primarily for pushing the Makhado hard coking coal project in Limpopo Province towards commercial production, alongside shoring up the company's general working capital.
The notes, split as US$6.14 million from KDG and US$3.8 million from Eagle Canyon, carry an interest rate pegged to the Reserve Bank of Australia's medium business loan rate plus a 3% margin, compounded monthly. Each tranche is repayable 12 months after drawdown unless converted into shares at a fixed price of US$0.2089 per share, subject to customary adjustments.
Conversion Hinges on Shareholder and Regulatory Approvals
Conversion rights for investors will only be exercisable following shareholder approval, which MC Mining plans to seek at a general meeting scheduled within the next month. The company has already received voting intentions from shareholders holding over 25% of voting rights in favour of the conversion, signalling initial support.
The notes rank pari passu with other unsecured debt and are structured to allow drawdowns in multiple tranches up to 30 September 2026, with investors retaining oversight on the use of funds. This arrangement provides MC Mining with both committed capital and flexibility to manage its funding needs during the critical commissioning phase.
Funding Focused on Finalising Makhado Infrastructure and Operations
Proceeds will fund the completion of civil works at the coal handling and preparation plant, ongoing overburden stripping and mining contractor costs, and the installation of supporting infrastructure such as power supply and water pipelines. The capital will also support commissioning activities and trial operations essential for transitioning Makhado into stable commercial production.
MC Mining’s Independent Board Committee, comprising non-executive directors Dr Steele West and Mr Mathews Senosi, oversaw the negotiation and recommendation of the funding, with legal advice from K&L Gates. Their involvement underscores the governance rigor applied given the related-party nature of the transactions.
Strategic Support from Major Shareholders Continues
This funding round builds on KDG’s controlling stake, acquired earlier this year through a US$90 million capital injection that accelerated Makhado’s progress towards production. Eagle Canyon’s participation as a significant minority shareholder further endorses the company’s development strategy and financial sustainability.
MC Mining’s focus remains on advancing Makhado while managing its other South African assets, including the Uitkomst and Vele collieries. The convertible notes structure preserves flexibility and avoids immediate equity dilution, balancing the need for capital with shareholder interests.
Bottom Line?
MC Mining’s convertible note deal offers a timely capital bridge for Makhado’s ramp-up, but shareholder approval and execution risks remain key hurdles.
Questions in the middle?
- Will shareholders approve the note conversion at the upcoming meeting?
- How quickly will MC Mining draw down the funds amid construction milestones?
- What impact could potential note conversion have on share dilution and market sentiment?
