Makhado Project

Makhado Project (95% owned - 69% post-Black Economic Empowerment transactions; Industrial Development Corporation of South Africa Limited (5%)). MC Mining’s flagship Makhado hard coking and thermal coal project in the Soutpansberg coalfield in the Limpopo province is situated 36km north of the town of Makhado and 80km southeast of the Vele Colliery. The phased development of the Makhado Project will ensure continued scalability. Phase 1 will see the mining of the west pit with the coal processed at the existing Vele Colliery processing plant, which will be modified accordingly. The construction of Phase 2 (previously known as the Makhado ‘Lite’ Project), east and central pits and Makhado processing plant, is expected to start in circa CY2022.

Phase 1 includes modifications to the existing Vele Colliery processing plant and the development of the Makhado west pit which has a nine-year life of mine. The approximate 3.0 million tonnes per annum (Mtpa) of run of mine (ROM) coal from the west pit will be scalped, removing the coarse parting and waste, and the resulting approximately 2.0Mtpa of coal will be transported by road to the Vele Colliery for further processing.

The Vele plant modifications will facilitate the simultaneous production of hard coking coal (HCC) and an export quality thermal coal, producing approximately 1.1Mtpa of saleable coal comprising 0.54Mtpa of HCC and 0.57Mtpa of thermal coal. An off-take agreement with one of the world’s largest bulk commodity production and marketing companies for the Phase 1 thermal coal was concluded during April 2019. MC Mining anticipates completing the Phase 1 composite funding arrangements during Q3 CY2019, facilitating the commencement of construction later in the same quarter, with production anticipated in June 2020.

Following the nine-month construction period, Makhado will be the only significant HCC mine in the country. The project will also provide significant direct and indirect benefits to communities located in an area. Makhado is expected to create approximately 650 permanent job opportunities, noteworthy in an area currently experiencing significant unemployment levels.

The development of Phase 2 in circa FY2022 which includes the mining of the east and central pits, Makhado processing plant and related infrastructure, will produce an estimated 4.0Mtpa of ROM coal yielding 1.6Mtpa to 1.8Mtpa of saleable product.

Ownership MC Mining 95% (reducing to 69% post Broad Based Black Economic Empowerment transaction that will result in the Makhado Colliery Community Development Trust owning 20% and a black industrialist (Yoright Investments (Pty) Ltd) holding the remaining 6%); Industrial Development Corporation (5%)
Location Limpopo province, South Africa, 65km southwest of Musina, 80km southeast of Vele Project
Infrastructure Road, power (Eskom) and rail from Musina to Matola Terminal in Maputo, Mozambique
Status Project development – Phase 1 to be developed in Q3 CY2019, funding development and Phase 2 (the previous Makhado ‘Lite’ Project plan) in circa CY2022
Life of mine (LOM) Phase 1 west pit with a nine-year LOM
Phase 2 east and central pits have 29-year LOM
Product Phase 1: ~3.0Mtpa run of mine (ROM) coal scalped at site and resulting ~2Mtpa ex-discard ROM coal transported to the Vele Colliery for further processing to yield ~0.54Mtpa of hard coking coal and ~0.57Mtpa of export quality thermal coal
Phase 2: ~4Mtpa of ROM coal yielding ~1.2Mtpa of saleable hard coking and export quality thermal coal
Resources 344.8Mt mineable tonnes in situ
Reserves 188.3Mt mineable tonnes in situ
Mining method Opencast
Regulatory status Full suite of authorisations
New order mining right Granted in May 2015 for 30 years
Environmental Authorisation

Granted in August 2013

Amended in July 2016 and transferred to Baobab Mining & Exploration (Pty) Ltd, the owner of the Makhado Project, commencement period extended to 2021

Amended in September 2018 to include transport of coal via road
Integrated Water Use Licence Granted in January 2016, valid for 20 years

Resource and Reserve statement

Abridged summary of JORC-compliant resources and reserve statement 30 June 2016 JORC-compliant resources (measured, indicated and inferred)1
  Gross tonnes in situ (Mt) Total tonnes in situ (Mt) Mineable tonnes in situ (Mt)
Makhado Project 795.6 691.7 344.8
  1. Resources are as at 30 June 2018 based on reliable exploration and mining results (where appropriate) and accurately estimated using industry best practice standards of modelling. The Resources have been correctly classified according to the JORC Code (2012).

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