Slide 1: Vele Colliery store and processing plant
For personal use only 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 For personal use only MATERIALS”) ARE FOR INFORMATION PURPOSES ONLY AND upon as indicative of future
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 For personal use only confidential basis and solely to and directed at, in the
Slide 4: Agenda
AGENDA For personal use only Introduction and strategy (including Makhado Project) 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 For personal use only Acquired Key surface rights for One LTI recorded Hard coking coal off-take the Makhado Project during November 2018 agreement signed with HDCTC Chapudi mining right granted Uitkomst underground Uitkomst sold Positive coal price mining operations 163,487t of coal tr
Slide 7: Location of operations and projects
LOCATION OF OPERATIONS AND PROJECTS For personal use only PAGE 7
Slide 8: Project pipeline
PROJECT pipeline For personal use only Vision to responsibly produce in excess of 1.5 to 1.6 Mtpa of saleable product by 2021* CURRENT SHORT-TERM LONG-TERM Makhado Third cash Uitkomst Vele GSP Project generator Production asset Surface rights secured Fully licenced Targets being Massive coking and C
Slide 9: Makhado phased approach
MAKHADO PHASED APPROACH • Delays in access to two key properties required for Makhado Lite For personal use only resulted in assessment of alternative strategies to develop the project timeously • Makhado Lite not replaced by Phase 1 – will be exploited as Phase 2 • Phased approach approved by MC Mi
Slide 10: Makhado Phase 1 overview
MAKHADO PHASE 1 For personal use only Phase 1 overview • Nine-month construction period • ~3.0Mtpa ROM coal from mining of west pit • Maximum pit depth of 80m and an average strip ratio of 1.94m3/t for first three years • Strip ratio of 2.08m3/t over nine-year life of west pit • Drilling confirms ha
Slide 11: Location of Phase 1 operations
LOCATION OF PHASE 1 OPERATIONS For personal use only PAGE 11
Slide 12: Makhado: Phase 1 flow
MAKHADO: PHASE 1 For personal use only ~2Mtpa ROM trucked to ROM coal Vele Colliery processed using Vele processing plant Saleable coal: ROM coal partially ~0.54Mtpa beneficiated at hard coking coal Makhado ~3Mtpa ROM coal ~0.57Mtpa thermal from Makhado coal west pit Hard coking and thermal coal tru
Slide 13: Makhado Phase 1 funding and processing
MAKHADO PHASE 1 • Makhado Phase 1 funding requirements (peak R460m) For personal use only • FEED process (+-10% accuracy) completed in February 2019 • Mining contractor to supply mining services and equipment - three quotes from reputable contractors received in February 2019 • Vele processing plant
Slide 14: Makhado Phase 1 summary
MAKHADO PHASE 1 SUMMARY For personal use only ROM production ~3.0Mtpa Life-of-mine - west pit only 9 years Hard coking coal production ~0.54Mtpa Thermal coal production ~0.57Mtpa Hard coking coal yield ~19% Thermal coal yield ~20% Construction period 9 months Peak funding R460m ($33.5m)* Capital exp
Slide 15: Makhado phased approach
MAKHADO PHASED APPROACH • Phase 1 designed to ensure continued scalability For personal use only and: • is an organically developed second cash generator • achieves the stated strategy of Group cash flow self-sufficiency with in an estimated peak funding payback period of < 2.5 years • delivers stro
Slide 16: Makhado phased approach – way forward
MAKHADO PHASED APPROACH – WAY FORWARD For personal use only MC Mining directors approved phased approach to Makhado in March 2019, subject to:: Finalised thermal offtake ~ Q2 CY2019 Debt funding of ~ $20m ~ Q2 CY2019 Raise equity to repay IDC and ~ Q3 CY2019 contribute to Phase 1 funding ~ $30m Phas
Slide 17: H1 FY2019 strategy assessment
H1 FY2019 STRATEGY ASSESSMENT Strategy Status Previous* Deliverable For personal use only • One LTI but overall safety satisfactory following acquisition and integration Continued focus on safety of Khethekile underground mining operations including 340 staff Acquisition of third cash • Two po
Slide 18: MC Mining's substantial resources and reserves
MC MINING’S SUBSTANTIAL RESOURCES AND RESERVES For personal use only 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) 3 Gross tonnes Total tonnes Mineable tonnes
Slide 19: Regulatory status of assets
REGULATORY STATUS OF ASSETS EA granted by the Environmental Access to For personal use only MR granted by the DMR IWUL granted by the DWS Project Departments surface rights Granted Duration Status Granted Duration Status Granted Duration Status secured 10 years Application to Uitkomst (Kwazulu-Natal
Slide 20: Operational and Project Review
MCM LIMITED OPERATIONAL AND PROJECT REVIEW DAVID BROWN Uitkomst- Colliery south adit and conveyor to the processing plant
Slide 21: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET For personal use only • High-grade thermal coal deposit in Utrecht coalfield, KwaZulu-Natal, for domestic metallurgical and thermal markets • 30% BEE ownership satisfies Mining Charter ownership requirements • Underground mine and planned LOM extension into
Slide 22: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET For personal use only $ ROM sales Revenue Gross profit ROM production Khethekile 157,452t $15.2m $2.9m of 237,715t underground mining Purchased ROM operations acquired sales 6,035t Coarse discard plant Additional mining Khethekile integration Revenue per to
Slide 23: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET For personal use only H1 FY2019 H1 FY2018 tonnes tonnes Production tonnages Uitkomst ROM 237,715 265,609 (11%) Purchased ROM to blend 12,466 80,727* (85%) 250,181 346,336 (28%) Sales tonnages Own ROM 157,452 174,948 (10%) Slurry used for blending - 53,690
Slide 24: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET For personal use only • Options assessed to further enhance financial performance and production levels including: • restructuring and reorganisation of underground mining operations • additional coarse discard saleable product • development of north adit •
Slide 25: Uitkomst: cash generative, producing asset
UITKOMST: CASH GENERATIVE, PRODUCING ASSET • 1 August 2018: acquired underground mining contractor operations – mining assets For personal use only and ~340 employees • Insourcing facilitates implementation of: • enhanced production cost control and maintenance regime • ownership of mine assets/ mac
Slide 26: Uitkomst: development of north adit
UITKOMST: DEVELOPMENT OF NORTH ADIT For personal use only • Finalisation of designs and tender process for north adit subject to granting of Integrated Water Use Licence and funding • Development of north adit will: • improve operating efficiencies by reducing man and material transport distances •
Slide 27: Vele: brownfields development project
VELE: BROWNFIELDS DEVELOPMENT PROJECT For personal use only • IWUL approval granted for non-perennial stream diversion • Processing plant to be modified to process Makhado ROM coal • Vele will produce two products from Makhado ROM coal – a hard coking coal and export quality thermal coal • SEZ gazet
Slide 28: Greater Soutpansberg Project: massive pipeline
GREATER SOUTPANSBERG PROJECT: MASSIVE PIPELINE – MEDIUM-TERM POTENTIAL For personal use only • 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 requ
Slide 29: Financial Review
MCM LIMITED FINANCIAL REVIEW BRENDA BERLIN » © ¢~ Historic coal production at Vele Colliery
Slide 30: H1 FY2019 key features
H1 FY2019 KEY FEATURES For personal use only • Gross Profit increased by 8% to $2.9m – all attributable to Uitkomst Colliery • Improvement despite 47% decline in sales volumes, 37% of which is due to limited availability of 3rd party ROM coal which is blended with Uitkomst slurry • Uitkomst benefitt
Slide 31: H1 FY2019 vs H1 FY2018 income statement variances
H1 FY2019 VS. H1 FY2018 INCOME STATEMENT VARIANCES For personal use only H1 FY2019 H1 FY2018 Variance $m $m $m Operating loss before impairment (0.6) (4.4) 3.8 Impairments (0.2) (87.5) 87.3 Net finance costs (2.2) (1.3) (0.9) Taxation (0.6) (6.8) 6.2 Net loss from continuing (3.6) (100.0) 96.4 opera
Slide 32: Cash flow analysis – H1 FY2019
CASH FLOW ANALYSIS – H1 FY2019 ($’000) For personal use only 12 000 10 000 3 600 8 000 115 2 768 2 690 577 620 214 6 000 10 931 390 4 000 5 493 2 000 - Opening cash Net cash utilsed Net interest & tax PPE & Khethekile assets Proceeds on sale Increase in Financing Foreign exchange Cash at period bala
Slide 33: Outlook and Conclusion
MCMining LIMITED OUTLOOK AND CONCLUSION DAVID BROWN
Slide 34: The coal market
For personal use only THE COAL MARKET • International coal prices remain positive • 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
Slide 35: Key deliverables to unlock intrinsic value
For personal use only KEY DELIVERABLES TO UNLOCK INTRINSIC VALUE FY2019 FY2020 FY2021 • Finalise thermal off-take agreement for • Construct Makhado Phase 1 • Makhado Phase 1 construction Makhado • Makhado west pit and completed, commercial production • Finalise funding for Makhado Project infrastruc
Slide 36: Moving forward: key advantages and risks
MOVING FORWARD For personal use only KEY ADVANTAGES • Major coal resource in South Africa - 8.7Bt in situ with extended LOM – over 100 years • Accelerated Makhado Project Phase 1 construction with reduced capex requirements • Well positioned for future provincial growth opportunities – SEZ close to
Slide 37: Moving forward: overall strategy
MOVING FORWARD For personal use only Overall strategy Drive to self-sufficiency through a financed Makhado Project and the Uitkomst Colliery PAGE 37 PAGE
Slide 38: Contacts
For personal use only Contacts Name David Brown Designation Chief Executive Officer Office +27 (0)10 003 8000 Email david.brown@mcmining.co.za Name Brenda Berlin Designation Chief Financial Officer Office +27 (0)10 003 8000 Uitkomst Colliery processing facility Email brenda.berlin@mcmining.co.za PAG