MC Mining outsources the Vele Aluwani Colliery
MC Mining Limited (MC Mining or the Company) has announced that it signed a Contract Mining Agreement with Hlalethembeni Outsourcing Services (Pty) Ltd (HOS) to recommission, upgrade and operate the Company’s Vele Aluwani Colliery (Vele or the Vele Colliery) coal processing plant (CPP) and undertake mining in terms of an agreed mine plan.
The Vele Colliery is located in the Thuli coalfield and is owned by Limpopo Coal Company (Pty) Ltd (LCC), a 100% held subsidiary of MC Mining. Vele has a life of mine in excess of 40 years. Vele was placed on care and maintenance in 2013 due to weak thermal coal prices and the requirement for modifications to the colliery’s CPP that would facilitate the extraction of the smaller coal fraction and the simultaneous production of semi-soft coking coal and thermal coal.
The Vele Colliery incurred high logistics costs when operational during 2012/2013, as the nearest export terminal is Maputo, which is ~760km away. The colliery currently incurs care and maintenance costs of approximately R21 million ($1.2 million) per year.
The Vele plant modifications were anticipated to take place as part of the previously envisaged phased development of the Company’s flagship Makhado hard coking coal project (Makhado Project or Makhado) and in terms of this development plan, Makhado’s crushed and screened run of mine coal would be processed at Vele, producing hard coking coal and a thermal by-product.
However, and following completion of the Makhado Bankable Feasibility Study in April 2022 and subsequent alternative development scenario study completed in August 2022, the MC Mining Board approved the construction of a new CPP at Makhado, meaning that Makhado run-of-mine coal would no longer be processed at the Vele Colliery.
This decision created optionality for the potential recommencement of operations at Vele, particularly given the improvement in coal prices during CY2022. The Vele CPP requires a fit-for-purpose new crushing circuit as well as a flotation circuit to extract the higher quality fine coal, with this equipment estimated to cost R158.4 million ($9.1 million) (the Equipment) to optimise the CPP.
MC Mining has evaluated the various options to recommence operations at Vele and, given the capital and working capital required, and particularly in the light of the Company’s focus on the development of its flagship Makhado Project, the outsourcing of operations at the colliery was considered the optimal strategy.
As a result of these strategic initiatives, the Company is pleased to announce that it has signed a Contract Mining Agreement (the Agreement) with Hlalethembeni Outsourcing Services (Pty) Ltd (HOS), a company owned by Mzwandile Themba Masondo.
Mr Masondo has a MSc. in Mining Engineering and over 30 years’ experience in coal mining, with over twenty years at mine management and Chief Operating Officer level.
