MC Mining’s revenue grew 80% to $25.2 million for the six months to December 31, primarily due to strong sales volumes at Uitkomst and the recommencement of operations at Vele near Musina.
The revenue increase at the emerging producer of thermal and coking coal came in spite of the substantial 58% decline in average API4 thermal coal prices for the six months, to $112/t from $265/t in the first half of 2023.
The company’s share price increased a robust 5.26% to 200 cents on the JSE on Friday.
In November 2023, a consortium of shareholders representing 64.3% of the company’s issued shares issued a takeover bid. Post-period, in February, MC MIning received a bidders statement for an off-market takeover bid by Goldway Capital, on behalf of the consortium, at $0.16 per share.
The Independent Board Committee recommended that shareholders take no action at the current time, and a Supplementary Target’s Statement and accompanying Independent Expert’s Report still needed to be issued.
In the six-month period, Uitkomst’s sales volumes were 94% higher at 202.715t of coal, generating revenue of $16.3m. The decline in coal prices resulted in the colliery’s revenue only improving by 16%.
Operations at Vele Aluwani Colliery recommenced in December 2022, but the depressed coal prices impacted Vele’s revenue of $9m.
The overall cost of sales increased primarily as a result of higher volumes of coal sold at Uitkomst and the recommencement of operations at Vele. Group cost of sales came to $24.1m versus $10.1m in 2023.
MC MIning’s taxed loss was $5.8m, down from $1.3m loss at the same time a year before.
This was mainly due to a $2.4m reduction in the Uitkomst Colliery’s gross profit due to lower coal prices and a $1.9m increase in employee costs, from one-off employee benefits payments, as well as an increase in the number of staff for the development of the Makhado Project and to restart operations at Vele.
Chief executive Godfrey Gomwe said the strong revenue growth through the period was very pleasing given the challenging coal market conditions.
“Our ability to continue to move product is important and we are seeing some signs of increased demand from thermal coal buyers. We continued to make worthwhile, long-term investment decisions in our flagship Makhado Project, which we believe will benefit shareholders in the future.” he said in a statement.
“The significant progress on the Makhado Project over the last two years has resulted in a development plan that can be implemented within a short period once the necessary funding is secured. We progressed the funding initiatives during the period and were at an advanced stage of securing the cornerstone funds for the development of the project, prior to being notified of the off-market takeover corporate action,” he said. – Staff reporter
BUSINESS REPORT