Operational review of Makhado Steelmaking Coking Coal Project

MC Mining’s flagship Makhado hard coking coal project (Makhado Project or Makhado) Soutpansberg Coalfield, Limpopo (67.3% owned) is situated in the Soutpansberg Coalfield. All regulatory approvals are in place and the required surface rights over the mining and coal handling and processing plant (CHPP) areas have been secured. MC Mining is heavily invested in the Makhado Project as the complex regulatory environment in South Africa demanded significant capital and time investment to achieve its current ‘shovel ready’ status.

The development of the Makhado Project is expected to deliver positive returns for shareholders and position MC Mining as South Africa’s pre-eminent steelmaking hard coking coal (HCC) producer. The planned CHPP annual ROM feed capacity is 4.0 million tonnes per annum (Mtpa) with a forecast HCC yield of 22.6% and a 17.6% yield of a 5,500k/cal thermal coal by-product. The Makhado steelmaking HCC will have an ash content of less than 10% and is expected to advantage South African steel producers as the coal could displace HCC currently imported. The development of Makhado is also expected to have a positive impact on employment and would create 650 direct jobs. The funding initiatives for Makhado continued during the period but were impacted by the takeover corporate action that commenced in September 2023, and may be reactivated depending on the outcome of the takeover offer.

The Makhado Project has the potential to produce in excess of 800,000t per annum of steelmaking HCC and over 600,000t of a 5,500kcal thermal coal by-product. The Company continued with the detailed design of the Makhado CHPP and related infrastructure, during the period in preparation of procurement. The Company also progressed the managed tender processes to select the mining contractor as well as the operating and maintenance contractors for the Makhado CHPP and laboratory. Relevant appointments are anticipated to be confirmed in H2 FY2024. The Company also initiated early works at the Makhado Project, and these activities included:

• Construction of the main access road and the preparatory earthworks for a bridge across the Mutamba river;
• Construction of the foundations for the CHPP bulk water supply reservoirs;
• Detailed design, procurement and construction of the power supply overhead transmission line – a critical path activity;
• Refurbishment of onsite accommodation to house project construction crews; and
• Securing the site including significant progress with erection of fencing.

The potential to produce coal earlier than anticipated in the 4.0Mtpa implementation plan is being assessed and further announcements will be made as this initiative progresses.