MC Mining: Makhado Hard Coking Coal Project – Soutpansberg Coalfield

MC Mining’s flagship Makhado Project has favourable economics and its development is expected to deliver positive returns for shareholders and will position the Company as South Africa’s pre-eminent hard coking coal (HCC) producer. The IDC which holds a 6.7% equity interest in Baobab Mining & Exploration (Pty) Ltd (Baobab), the owner of Makhado, remains committed to the Company’s growth.

Subsequent to the end of the quarter, the IDC agreed to extend the date for repayment of the existing R160 million ($10.3 million) loan plus interest as well as to extend the terminal draw down date in respect of the conditional R245 million ($15.8 million) term loan facility for the development of the Makhado Project, to 30 November 2022.

In the unlikely event that the Company does not repay the existing loan by the repayment date, the financing documentation allows for the debt to be converted into equity.

During January 2019, Baobab completed the acquisition of the Lukin and Salaita properties, being the key surface rights for the Makhado Project. The balance of the purchase price of R35 million ($2.2 million) (plus interest) (the Deferred Payment) was payable by Baobab on 10 January 2022. The Company paid an instalment of R6 million ($0.4 million) on 12 January 2022 which will be deducted from the Deferred Payment, and the vendor agreed to extend the due date for payment of the balance, to 28 February 2022. MC Mining is currently resolving the funding required for the Deferred

Payment and interest on the unpaid Deferred Payment will accrue at the effective annual rate of 15.2% from 10 January 2022.

The Company continues to work with Baobab and its advisers to complete the funding requirement for development of the Makhado Project. A further announcement will be made in due course, as and when applicable.

A number of parties are continuing their due diligence review for providing the balance of the funding required by the Company to develop Makhado. MC Mining remains confident that the parties taking part in the process will commit the necessary funds to complete the funding package, anticipated to be finalised during H1 CY2022. The Company is progressing several alternative strategies to raise additional funding including, but not limited to, the issue of new equity for cash in MC Mining or subsidiary companies, or further debt funding

VELE SEMI-SOFT COKING AND GREATER SOUTPANSBERG COLLIERIES

The Vele Colliery remained on care and maintenance during the quarter and no LTIs were recorded during the period (FY2022 Q1: nil). The Vele processing plant is to be refurbished and recommissioned as part of Phase 1 development of the Makhado Project. Greater Soutpansberg Project recorded no LTIs (FY2022 Q1: nil) during the quarter and no reportable activities occurred during the period.

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