Limpopo Coal concludes offtake agreement for Makhado thermal coal

17 April 2019 (Last Updated April 17th, 2019 12:13)

MC Mining’s wholly owned subsidiary Limpopo Coal Company has concluded a coal sale and purchase agreement with a company that produces and markets bulk commodities.

Limpopo Coal concludes offtake agreement for Makhado thermal coal
The agreement is for the offtake of thermal coal produced by Phase I of the Makhado project. Credit: Yaroslav Maltsev on Unsplash.

MC Mining’s wholly owned subsidiary Limpopo Coal Company has concluded a coal sale and purchase agreement with a company that produces and markets bulk commodities.

The agreement is for the offtake of export quality thermal coal, which will be produced by Phase I of the Makhado project in Limpopo.

The Makhado hard coking and thermal coal project is owned by MC Mining’s subsidiary Baobab Mining & Exploration.

MC Mining noted that the Phase I construction period is expected to start in the third quarter of this year and will continue for nine months.

“The phased development of the Makhado Project will generate a significant number of employment opportunities in the Limpopo province.”

During this phase, approximately three million tonnes per annum (Mtpa) of run-of-mine (ROM) coal will be generated from the west pit.

It will undergo preliminary processing at the mine and yield an estimated 2Mtpa of ROM coal which will be transported and sold to Limpopo.

MC Mining CEO David Brown said: “The phased development of the Makhado Project will generate a significant number of employment opportunities in the Limpopo province and the export of the thermal coal utilises previously tested logistics infrastructure.

“Negotiations for a composite debt and equity funding arrangement continue and we anticipate that they will be completed in Q3 CY2019, with Phase I construction commencing later in the quarter.”

Construction of Phase II of the Makhado project is set to start in CY2022. This phase is expected to produce 4Mtpa of ROM coal from the east and central pits and will result in 1Mtpa of thermal coal.

Under the agreement, sales prices will be calculated and agreed on a quarterly basis.

Saleable thermal coal will be delivered to the Musina siding and sold on a free-on-rail basis.

MC Mining secured conditional approval from its directors to begin the first phase of development at its Makhado project.