MC Mining Limited announced the completion of their Bankable Feasibility Study (BFS) for its fully licenced Makhado hard-coking coal project (Makhado Project or Makhado) just north of the Soutpansberg in Limpopo last week.
According to a press release issued by the mining company, the BFS was prepared by Minxcon (Pty) Ltd (Minxcon), an independent mining-industry consulting firm, and is a key milestone in securing the funding for Makhado. The company said that they expected to finalise the financing for the Makhado Project in the third quarter of 2022, with construction commencing soon thereafter. "The BFS confirmed that Makhado has JORC/SAMREC compliant 296 million mineable tonnes in situ (MTIS) of Measured and Indicated Coal Resources, 7.2 million MTIS of Inferred Coal Resources and 69.3 million tonnes of Proved and Probable Coal Reserves under the proposed open-pit mining and coal-processing methods," stated the press release.
MC Mining has a 68% interest in the Makhado Project through its subsidiary, Baobab Mining & Exploration (Pty) Ltd, with the Industrial Development Corporation of South Africa Limited (IDC) owning 6.7%, seven local communities owning 20% and the remaining 6% held by a Black Economic Empowerment industrialist.
"The development of Makhado will provide significant direct and indirect benefits to local communities in one of the poorest areas of South Africa. MC Mining remains committed to the sustainable development of Makhado Project. The company also owns the surface rights of the properties required for the project and has the requisite regulatory approvals to commence mining at Makhado. Striving to unlock near-term shareholder value, the Makhado Project's development plan in the BFS was designed to minimise the upfront capital expenditure by utilising existing infrastructure that is currently on care and maintenance," stated the mining company.
The BFS envisages the initial mining of the West Pit, which is followed by mining of the East and Central Pits, while the existing coal processing plant (CPP) at the Vele Colliery will be modified allowing it to simultaneously produce hard-coking coal (HCC) and export-quality thermal coal. The mining company explained that the West, East and Central pits will be mined at a combined average rate of 3.2 million tonnes per annum (Mtpa) with the run of mine (ROM) material being crushed and screened at Makhado prior to dispatch to the Vele CPP. Over the life-of-mine, approximately 2.0 Mtpa of crushed and screened coal will be transported 134km, to the Vele CPP where the coal will be processed to produce two marketable products – a mid-volatile HCC for sale domestically and internationally and, a 5,500 kcal (API3) thermal coal for sale on the international market.
"Makhado has an offtake agreement with ArcelorMittal South Africa Limited for the domestic supply of up to 450,000 tonnes of HCC per annum and has also commenced off-take discussions with various parties for the balance of the HCC as well as the export of the thermal coal," said the company.
Sam Randazzo, interim chief executive officer of MC Mining, commented: "The completion of the BFS reflects a key advancement of Makhado and confirms the project's robust economics. The BFS is based on the project plan with the lowest capital cost options and results in Makhado's ROM coal being transported to the Vele Colliery for processing for the entire LOM. The forecast HCC and thermal coal prices used in the BFS were sourced from independent advisors and are considerably lower than current index prices, reflecting Makhado's robust economics and significant upside. The BFS is a key milestone in securing the funding for Makhado."