Our opinion on the current state of MCZ

MC Mining, formerly known as "Coal of Africa," is a modestly sized company focused on metallurgical coal mining, with Uitkomst as its only producing mine. Besides Uitkomst, the company is actively developing several projects, including the Makhado project, the Vele colliery, and MbeuYashu, showcasing its commitment to growth within the sector.

The Makhado project, located in the Limpopo province, stands out as the company's flagship operation. It is an open-cast mine with a significant lifespan of 16 years, which may be extended further, emphasizing the project's long-term potential. In January 2019, a pivotal moment for MC Mining occurred with the acquisition of surface rights, making the Makhado project feasible. With production anticipated to start by the end of 2020, the mine is expected to yield 800,000 tons of hard coking coal and 1 million tons of export thermal coal annually, marking a significant milestone for the company. The viability and reduced risks associated with the Makhado project have significantly enhanced its investment appeal.

Financial backing for the Makhado project is partly secured, with the Industrial Development Corporation (IDC) contributing R245m, although an additional R530m is still required. Ownership stakes are strategically structured, with MC Mining holding a 69% interest in Baobab Mining and Exploration, the entity that owns the Makhado project.

For the six-month period ending on 31st December 2023, MC Mining reported an 80% increase in revenue alongside a headline loss of 145c (US) per share, an escalation from a 50c loss in the prior period. This financial performance reflects the volatility and challenges in the coal market, with international thermal coal prices experiencing significant pressure. Despite these challenges, the Uitkomst Colliery managed to generate satisfactory results, with revenue of $16.3 million and a gross profit of $1.5 million, alongside operating cash flows of $5.1 million. These figures demonstrate the colliery's resilience amid fluctuating coal prices.

A significant development for MC Mining was reported on 8th April 2024 by Business Day, revealing that Goldway Capital had received acceptances from shareholders for 83.67% of the issued shares, surpassing the 82.15% threshold needed for the takeover to proceed. This move marks a crucial phase in MC Mining's corporate journey.

From a technical perspective, the company's shares have exhibited volatility, with notable spikes between July and September 2022 before retracting to lower levels. This volatility underscores the inherent risks associated with commodity shares, coupled with MC Mining's high debt levels and the challenges of mining exploration and development. With approximately R280,000 worth of shares traded daily, the company's stock remains a high-risk but potentially high-reward investment option in the mining sector.