Slide 1: Vele Colliery store and processing plant
Vele Colliery store and processing plant PAGE
Slide 2: Disclaimer
DISCLAIMER THESE PRESENTATION MATERIALS (THE “PRESENTATION statements, estimates, forecasts and projections should not be relied The Presentation Materials are being issued on a strictly private and MATERIALS”) ARE FOR INFORMATION PURPOSES ONLY AND upon as indicative of future value or as a guarante
Slide 3: Disclaimer
DISCLAIMER The Presentation Materials are being issued on a strictly private and The Presentation Materials are confidential and should not be copied, and has experience in mining mergers and acquisitions. He is currently confidential basis and solely to and directed at, in the case of distributed o
Slide 4: Agenda
AGENDA Introduction and strategy David Brown Operational and project review David Brown Financial review Brenda Berlin Outlook and conclusion David Brown Vele Colliery store and processing plant PAGE 4 PAGE
Slide 5: Introduction and Strategy
MCMi LIMITED INTRODUCTION AND STRATEGY DAVID BROWN Uitkomst-Colliery:in KwaZulu-Natal, acquired 30 June 2017
Slide 6: Key features
KEY features Cash preservation and Mooiplaats Colliery One LTI recorded strategy execution sold for $12.9m during June 2018 progressed Uitkomst Colliery Uitkomst sold Positive coal price integrated 475,079t of coal trends continued LTI Lost time injury PAGE 6 PAGE
Slide 7: Balance sheet restructured and legacy issues resolved
BALANCE SHEET RESTRUCTURED AND LEGACY ISSUES RESOLVED Significant inherent structural obstacles resolved during last five years and now positioned for further growth Year $m Balance sheet restructuring resulted in proceeds of $34.2m from sale of non-core and non- performing assets: Opgoedenhoop FY20
Slide 8: Location of operations and projects
LOCATION OF OPERATIONS AND PROJECTS * Sold during the financial year PAGE 8
Slide 9: Project pipeline
PROJECT pipeline Vision to responsibly produce in excess of 2.2Mtpa of saleable product by 2021* CURRENT SHORT-TERM LONG-TERM Makhado Second cash Uitkomst Vele GSP Project generator Production asset Fully licenced Targets being Fully licenced Mining right Cash generative Current processes: assessed
Slide 10: FY2018 Strategy assessment
FY2018 STRATEGY ASSESSMENT Strategy Status Deliverable Continued focus on safety • One LTI, first LTI in four years, but overall safety satisfactory Acquisition of second cash generating asset • Several acquisition targets assessed, did not meet investment criteria • Interim interdict lifted
Slide 11: Mooiplaats Colliery disposal
MOOIPLAATS Colliery disposal • Sold for $12.9m (R179.9m) • $1.4m p/a reduction in overhead costs • Settled as follows: • $3.7m received during FY2018 • $1.1m received but paid to Mooiplaats BEE partner • $8.1m balance to be paid in 10 equal quarterly instalments • DMR approval received post year-end
Slide 12: Regulatory status of assets
REGULATORY STATUS OF ASSETS NOMR granted by the DMR IWUL granted by the DEA EA granted by the DEA Access to Project surface rights Granted Duration Status Granted Duration Status Granted Duration Status secured 10 years Application to Uitkomst (Kwazulu-Natal) Until 2023 1 (granted in 2011) Fully
Slide 13: Operational and Project Review
MCM LIMITED OPERATIONAL AND PROJECT REVIEW DAVID BROWN Uitkomst- Colliery south adit and conveyor to the processing plant
Slide 14: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET • High-grade thermal coal deposit in Utrecht coalfield, KwaZulu-Natal, for domestic metallurgical and thermal markets • Acquired 30 June 2017: MCM 91%, BEE partners (including employees and local communities) 9% • additional 21% interest sold, on vendor fin
Slide 15: Uitkomst: cash generative, producing asset
UITKOMST: cash generative, producing asset Revenue Gross profit ROM production Purchased ROM $32.7m $5.4m 5% to for blending 505,130t 102,830t $ $ $ Sales from ROM Sales from Sales from ROM Revenue per tonne 13% to 329,060t purchased ROM purchased to 26% to $63.52/t sales from slurry to blend wash 1
Slide 16: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET FY2018 FY2017* tonnes tonnes Production tonnages Uitkomst ROM 505,130 481,547 5% Purchased ROM to blend** 102,830 342,096* (70%) 607,960 823,643 (26%) Sales tonnages Own ROM 329,060 291,163 13% Slurry used for blending 53,689 61,211 (12%) Purchased ROM to
Slide 17: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET • Options assessed to further enhance Uitkomst financial performance, production levels including: • restructuring and reorganisation of underground mining operations • development of north adit • 1 August 2018: acquired Khethekile’s – underground mining co
Slide 18: Uitkomst: development of north adit
UITKOMST: DEVELOPMENT OF NORTH ADIT • Finalisation of designs and tender process for north adit is planned for FY2019/20 • Development of north adit will: • improve operating efficiencies by reducing man and material transport distances • increase ROM production by approximately 150 000tpa • Once al
Slide 19: Makhado: greenfields evaluation asset
MAKHADO: GREENFIELDS EVALUATION ASSET • Fully permitted • Restructured to reduce capex requirements, execution risk, align production with current market options • lower operational risks during early phases • lower capital required for construction • Costs updated using: • four contract mining prop
Slide 20: Makhado: greenfields evaluation asset
MAKHADO: greenfields evaluation asset Makhado ROM production 4Mtpa LoM 46 years Hard coking coal production 0.7 – 0.8Mtpa Thermal coal production 0.9 – 1.0Mtpa* Construction capital (real) R1,052 million ($79 million) Construction period 12 months HCC yields anticipated ~19.0% Thermal coal yields an
Slide 21: Makhado: greenfields evaluation asset
MAKHADO: GREENFIELDS EVALUATION ASSET • Produce HCC complying with recognised global coking coal parameters • South Africa imports all HCC requirements and annual domestic demand outstrips revised Makhado production • Advanced stage discussions with potential local and international customers • Makh
Slide 22: Makhado: Heads of Agreement
MAKHADO: HEADS OF AGREEMENT • September 2018 HOA with CRIG (leading international Chinese construction enterprise) • Combination of debt and equity to be used to fund Makhado development • Agreed to exclusive negotiations for EPC of Makhado until 30 June 2019 • includes EPC for processing plant, fin
Slide 23: Vele: brownfields development project
VELE: BROWNFIELDS DEVELOPMENT PROJECT • IWUL approval granted for non-perennial stream diversion • Investment in Vele impaired by $87.5m in FY2018 resulting from: • shift in strategic focus • SEZ development potentially delaying re-commencement production to FY2022 • Assessment of Vele’s position wi
Slide 24: Greater Soutpansberg Project: massive pipeline
GREATER SOUTPANSBERG PROJECT: MASSIVE PIPELINE – MEDIUM-TERM POTENTIAL • Chapudi, Generaal and Mopane Projects, early stage coking and thermal coal exploration projects, Soutpansberg Coalfield • Over 1.6Bt mineable tonnes in situ • Consolidation of tenements and ore bodies required to improve mine p
Slide 25: MC Mining's substantial resources and reserves
MC MINING’S SUBSTANTIAL RESOURCES AND RESERVES Abridged summary of JORC compliant Resource JORC-compliant Resources JORC-compliant Reserves & Reserve statement at 30 June 2018 (Measured, Indicated and Inferred) 1,2 (Proven & Probable) 2 Gross tonnes Total tonnes Mineable tonnes Reserves Project name
Slide 26: Financial Review
MCM LIMITED FINANCIAL REVIEW BRENDA BERLIN » ¢~ Historic coal production at Vele Colliery
Slide 27: FY2018 income statement normalisation
FY2018 INCOME STATEMENT NORMALISATION • Income statement loss of $101.6 million (FY2017: $15.6 million) included non-recurring charges of $91.8 million (FY2017: $7.6 million): $87.5 million impairment of Vele Colliery – as disclosed in H1 FY2018 from prioritisation of Makhado Project and SEZ timing
Slide 28: FY2018 loss variances
FY2018 LOSS VARIANCES Basic loss ($ million) Variance analysis $ million FY2018 101.4 Impairments (76.8) FY2017 15.5 85.9 Uitkomst gross profit 5.4 Exchange losses (4.8) Net finance costs (1.6) Deferred taxation (5.8) Other sundry items (2.3) (9.1) Basic loss (85.9) PAGE 28 PAGE
Slide 29: Cash generated
CASH GENERATED FY2018 FY2017 $’000 $’000 Loss before tax per the income statement (97,043) (17,662) Profit from discontinued operations 2,185 1,815 Group loss for the year before tax (94,858) (15,847) Add back non-cash items 96,860 5,623 (continuing and discontinued operations): Depreciation and amo
Slide 30: Cash flow analysis – FY2018
CASH FLOW ANALYSIS – FY2018 ($’000) 12000 642 683 2 002 10000 4 985 8000 6 692 6000 2 315 10 931 9 646 4000 2000 0 Opening cash Net cash generated Net interest & tax PPE & Exploration Proceeds on sale of Financial assets, Foreign exchange Cash at year end balance from operations Mooiplaats financial
Slide 31: Outlook and Conclusion
MCMining LIMITED OUTLOOK AND CONCLUSION DAVID BROWN
Slide 32: The coal market
THE COAL MARKET • International coal prices improved during FY2018 • significantly lower investment in new coking and thermal coal mines for several years • minimal new investment in South Africa with capex spent on maintenance rather than increased production • reduced future supply with declining
Slide 33: Key deliverables to unlock intrinsic value
KEY DELIVERABLES TO UNLOCK INTRINSIC VALUE FY2019 FY2020 FY2021 • Potential access to Makhado site • Makhado construction completed to complete geotechnical drilling • Makhado commercial production Potential • Sign off-take agreements with Makhado attained HCC and thermal coal customers • Uitkomst n
Slide 34: Moving forward
MOVING FORWARD KEY ADVANTAGES • Major coal resource in South Africa - 8.9Bt in situ with extended LoM – over 100 years • Well positioned for future provincial growth opportunities – SEZ close to MCM significant resources • HCC differentiator – local and export supply • Logistics in place and well te
Slide 35: Moving forward
MOVING FORWARD Overall strategy Drive to self-sufficiency through the development of Uitkomst, acquisition of a second cash generator and/ or a financed Makhado Project PAGE 35 PAGE
Slide 36: Contacts
Contacts Name David Brown Designation Chief Executive Officer Office +27 10 003 8000 Email david.brown@mcmining.co.za Name Brenda Berlin Designation Chief Financial Officer Office +27 10 003 8000 Uitkomst Colliery processing facility Email brenda.berlin@mcmining.co.za PAGE 36 PAGE