Recommissioning of Vele Colliery to add cash to MC Mining’s portfolio
Due to the global economic downturn and lower coal prices, Vele was placed on care and maintenance from August 2013. The Vele Coal Resource comprises both steelmaking semi-soft coking coal (SSCC) and export quality thermal coal.
Vele’s CHPP does not have the requisite fines circuits that would allow for the simultaneous production of SSCC and thermal coal; Construction of a CHPP at Makhado and improved market conditions created optionality for the potential recommencement of operations at Vele as previous Makhado development strategies incorporated the processing of Makhado crushed and screened ROM coal at Vele;
To take advantage of this opportunity, a Contract Mining Agreement was concluded with Hlalethembeni Outsource Services Proprietary Limited (HOS) and the recommissioning of Vele in December 2022.
With limited financial and human capital requirements, the recommissioning of Vele adds a further cash generating unit to MC Mining’s portfolio with limited financial or human capital contributions and by the end of June 2023, had created 333 permanent jobs.
HOS is responsible for all mining and processing costs and MC Mining remains responsible for the colliery’s regulatory compliance, rehabilitation guarantees, relationships with authorities and communities as well as the supply of electricity and water.
Construction of the overhead electricity line was completed in April 2023 and the Vele CHPP was connected to the national power grid in May 2023.
HOS completed the de-watering of the Vele Colliery open-cast pit and produced 96,673t (FY2022: nil t) of thermal coal during H2 FY2023; and ramp-up to full production is expected to occur in H2 CY2023 with HOS targeting monthly production of 60,000t of saleable thermal coal from Vele.
MC Mining in its H1 2023 report says the loss after tax for the period decreased by 79% to $4.4 million after tax of $20.8 million. Contributing to the loss of $4.4 million were non-cash charges which decreased by 80% to $3.7 million (FY2022: $18.3 million).
Godfrey Gomwe, Chief Executive Officer and Managing Director of MC Mining, commented: “MC Mining made pleasing progress during FY2023 including the completion of the A$40 million Rights Issue, the recommencement of operations at the Vele Colliery and the detailed planning for the construction of the Makhado Project. The conclusion of the Marketing Agreement ensured the Uitkomst Colliery could take advantage of favourable international thermal coal prices during H1 FY2023.
