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Uitkomst Colliery secures lending facility

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World Coal,

MC Mining Ltd, operating in South Africa, has announced that its 70% owned Uitkomst Colliery has secured a R20 million (approximately US$1.4 million) facility from ABSA Bank Ltd, a major South African financial services provider.

Uitkomst transitioned to an owner-operated mine in August 2018 with the acquisition of the independent underground mining contractor's business operations, which included mining equipment and the transfer of approximately 340 contractor employees. Following this, the colliery secured a five-year, R15 million, asset finance facility from ABSA, used to finance new underground mining equipment.

The cash flows generated by Uitkomst are greater than envisaged when the colliery was acquired in June 2017 and the facility will be used to fund short-term working capital requirements and potential expansion opportunities. The facility has a floating coupon at the South African Prime rate (currently 10.0% per annum) plus 1.0%, with Uitkomst debtors ceded as security and is subject to annual review.

David Brown, MC Mining's CEO, commented: "The facility further enhances our relationship with ABSA and is an endorsement by an independent financial institution of the potential of Uitkomst Colliery and its ability to deliver on tonnage targets coupled with prevailing favourable coal prices. In addition, MC Mining continues to progress with various initiatives relating to the Makhado hard coking and thermal coal project with further updates to come."

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South Africa coal news