Sales at Uitkomst plummet 51%
Sales at MC Mining’s sole operating asset, Uitkomst, plunged 51% in the March quarter, but the company’s overall cash position improved 20% to $11.7m. The junior producer has received all regulatory approval for coking and thermal coal project Makhado, offering the prospect of entering the export market for thermal coal. /Page 10
Sales at MC Mining’s sole operating asset, Uitkomst, plunged 51% in the quarter to end-March, but the company’s overall cash position improved 20% to $11.7m.
The junior producer, formerly known as Coal of Africa, has now received all regulatory approval for coking and thermal coal project Makhado, offering the prospect of entering the export market for thermal coal. But the sector is facing headwinds as geopolitical tension threatens to crimp demand.
The company said on Thursday that production and sales at Uitkomst were hit by a lack of third-party coal, needed for blending, as well as heavy rainfall, which affected vehicle access to stockpiles. Production fell 33% to 70,627 tonnes.
Uitkomst remained cash generative during the period, and stockpiles were expected to be sold during the June quarter, said MC Mining CEO David Brown. Sales revenue per tonne climbed 42% to $86.99, despite global price pressure. This was attributed to a change in the sales mix, with no lower-cost slurry sold. Off-take discussions for production at Makhado are now expected to be finalised during this quarter, with construction expected to be complete within 12 months after it commences.
Uitkomst produces coal for the local metallurgical market, and Makhado will provide hard coking and thermal coal.
CLOUDY OUTLOOK
South African coal producers have benefited from higher global prices for the past two years. But the outlook is cloudy.
Previously, Chinese environmental efforts and Indian supply disruptions bolstered import demand from both these countries, though India has rapidly recovered from Monsoon-related difficulties. India receives 50% of South African coal exports.
Afriforesight chief energy economist and CEO Charles Kieck said there was uncertainty regarding commodities, but a full-scale trade war was unlikely and India’s 2020 target of 1billion tonnes of production was seen as overly ambitious.