MC Mining, a coal mining company, has released an updated life-of-mine (LoM) plan and coal reserve estimate for its Makhado steelmaking hard coking coal project. The new plan shows a significant increase in mine life, up by 27%, and a 25% higher yearly mine production rate. The updated estimates consider conservative costs, macroeconomic factors, and coal prices.

The proven and probable coal reserves, reported in accordance with Joint Ore Reserve Committee (Jorc) guidelines, have increased by 53% from 69 million tonnes to 106 million tonnes. This increase is a result of detailed mine designs completed for the East Pit deposit in preparation for mining operations. The updated plan also indicates a 64% increase in saleable steelmaking hot coking coal, from 13.7 million tonnes to 22.5 million tonnes, with an overall yield of 21.2%. Additionally, there is a 57% increase in saleable coal, from 11.9 million tonnes to 18.7 million tonnes, with an overall yield of 17.6%.

Compared to the Scenario 2 plan completed in August 2022, the updated LoM plan shows considerable improvement, with enhanced production metrics and updated cost assumptions accounting for recent inflationary and market cost escalations. The project's financial returns have also improved, including a 20% increase in free cash flows to $936 million, a 17% increase in post-tax net present value from R5.8 billion to R6.8 billion, an internal rate of return of 37%, and earnings before interest, taxes, depreciation, and amortization margin of 30%.

MC Mining reports steady progress in critical early works activities aligned with the project implementation plan. The LoM plan encompasses mining the East, Central, and West coal deposits using surface mining methods. The coal reserve estimate is derived from this updated LoM plan, considering updated costs, macroeconomic factors, and coal price assumptions. The updated plan and reserve estimate are necessary for securing funding.

CEO Godfrey Gomwe expresses satisfaction with the substantial increase in coal reserves, extended mine life, and improved annual production rate for saleable coal products. He believes this positions the Makhado project to optimize costs and benefit from favourable prices for steelmaking hot coking coal in the near term. The company remains on schedule for first coal production within 18 months after construction begins.