MC Mining Limited
Previously Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000MCM9
JSE share code: MCZ
ASX/AIM code: MCM

ANNOUNCEMENT                                                                     22 December 2023

                            OPERATIONS AND TRADING UPDATE
MC Mining Limited (MC Mining or the Company) provides an operational and trading update for
shareholders.

Highlights

   MC Mining’s flagship Makhado steelmaking hard coking coal project (Makhado Project or
    Makhado) is progressing the tender process for the selection of the mining, operating and
    maintenance contractors which will look to be completed in Q1 CY2024.
   The Company is assessing the various scenarios for the Makhado Project to facilitate an
    accelerated start of coal production in H2 CY2024 (subject to further funding) and anticipates
    making further announcements in due course.
   Uitkomst Colliery turnaround initiatives through underground production continues to yield
    positive results. Further market development initiatives will be completed to improve margins in
    H1 CY2024.
   Due to recent production performance of the Vele Aluwani Colliery (Vele or the Vele Colliery), the
    Company in collaboration with its mining contractor, Hlalethembeni Outsourcing Services (Pty)
    Ltd (HOS) is immediately proceeding with a number of improvement initiatives.

Makhado Project (67% owned) – Resource size: 757.54 million tonnes (Mt) Gross Tonnes in Situ (GTIS)

The detailed design of the coal handling and processing plant (CHPP) and related infrastructure for
the Makhado Project is ongoing in preparation for procurement. The critical early works activities to
ensure that the site is secure, as well as construction of water infrastructure for the CHPP continue
and will be completed with available cash resources. The Company continues to progress the managed
tender processes to select the mining contractor as well as the operating and maintenance contractors
for the Makhado CHPP. Relevant appointments are anticipated to be confirmed in Q1 CY2024.
The Makhado Project remains a significant strategic asset for the Company that has the potential to
take the Company’s production profile to in excess of 800,000 tonnes per annum of steelmaking hard
coking coal (HCC) and cement MC Mining as South Africa’s preeminent HCC producer.

The Company continues to progress a number of funding initiatives to bring Makhado into production
which it now expects to be completed in H1 CY2024, with the 18-month construction period
commencing soon thereafter. Management and the Company’s board are focused on maximising
shareholder returns with respect to these funding initiatives and will potentially include, amongst
others:

   Build, own, operate, transfer (BOOT);
   Senior debt and composite debt/equity instruments;
   Coal prepayments; and
   Engineering, procurement and construction (EPC) contracts.

The Company is also assessing various scenarios for the Makhado Project to facilitate an accelerated
start of coal production in H2 CY2024 and anticipates making further announcements in due course.

Uitkomst Colliery (84% owned) – Resource size: 25.58Mt GTIS

The turnaround plan (Operation Phenduka) introduced at the underground Uitkomst Colliery
(Uitkomst) earlier this year continues to yield tangible and financial benefits. Importantly these
initiatives have not only resulted in positive trends with regards to safety but material improvements
in run of mine coal and saleable coal production.

The poor performance of the state utility responsible for rail and port logistics has impacted Uitkomst,
leading to higher logistics costs for export customers, resulting in this coal being sold in the domestic
market rather than internationally. The increase in production at consistent volumes has facilitated
the reassessment of the colliery’s coal product portfolio including the ability to sell coal to the
pulverised steelmaking coal or thermal coal markets. These initiatives are expected to be completed
in Q1 CY2024.

Vele Aluwani Colliery (100% owned) – Resource size: 792.58Mt GTIS

Background
MC Mining’s wholly owned subsidiary, Limpopo Coal Company (Pty) Ltd (LCC), signed a Contract
Mining Agreement (the Agreement) with HOS in December 2022 to recommission, upgrade and
operate the Vele’s coal handling & processing plant (CHPP) and undertake mining in terms of an
agreed mine plan.
The Vele Colliery is located in the Thuli coalfield and has a life of mine in excess of 40 years. Vele was
placed on care and maintenance in 2013 due to weak thermal coal prices and the requirement for
modifications to the colliery’s CHPP that would facilitate the extraction of the smaller coal fraction
and the simultaneous production of semi-soft coking coal and thermal coal. The Vele Colliery incurred
high logistics costs when operational during 2012/2013, as the nearest export terminal is Maputo,
which is ~760km away.

The improvement in coal prices during CY2022 created optionality for the potential recommencement
of operations at Vele. MC Mining evaluated various options to recommence operations at Vele and,
given the capital and working capital required and the Company’s focus on the development of its
flagship Makhado steelmaking hard coking coal project, the outsourcing of operations at the colliery
was considered the optimal strategy.

Contract Mining Agreement
As previously announced, the Company signed the Agreement in December 2022 and following this,
HOS recommissioned and upgraded the Vele Colliery CHPP and commenced mining. The Agreement
is on an exclusive basis to produce thermal coal and endures for an initial five-year period to December
2027. HOS targeted monthly production of 60,000t of saleable thermal coal from Vele and LCC earns
R200/t (excluding VAT) (US$11/t) for each tonne of saleable coal produced if the average monthly
API4 export coal price is above US$120/t. HOS is responsible for all mining and processing costs at
Vele while LCC remains responsible for the colliery’s regulatory compliance, rehabilitation guarantees,
relationships with authorities and communities as well as the supply of electricity and water.

Re-engineering of operations
HOS has experienced challenges in attaining the targeted monthly saleable coal production while unit
costs have been adversely impacted by the lack of access to rail capacity to transport Vele’s coal to
port. The railing of coal was anticipated to result in a significant reduction in logistics costs due to the
colliery’s location and the high cost of trucking coal to port and domestic customers. The challenges
experienced by the colliery have been exacerbated by the decline in the API4 export thermal coal price
during CY2023. The three-month average API4 price for Q1 CY2023 was US$146/t, reducing to
US$115/t in Q2 CY2023, US$109/t in Q3 CY2023 and currently trades at approximately US$102/t.

HOS has informed LCC that due to the production challenges at Vele, combined with elevated logistics
costs and the depressed API4 coal price, it intends downscaling operations at Vele and while it
progresses a production optimisation strategy at the colliery. As a result, HOS has exercised the
hardship clause in the Agreement and will downscale operations at Vele during the remainder of
December 2023 and January 2024. HOS’s production optimisation strategy (Operation Shandukani)
will potentially include, amongst others, changes to the mining methodology, as well as further
modifications to the CHPP and securing access to rail transport at competitive prices. The evaluation
of these measures is expected to take place in H1 CY2024 and will result in improved profitability at
the colliery.

Receipt of Non-Binding Indicative proposals

As announced on 2 November 2023, the Company received a notice of Intention to make a Takeover
from Senosi Group Investment Holdings Proprietary Limited and Dendocept Proprietary Limited, each
substantial shareholders of the Company, sent on behalf of shareholders and associates stated to
represent in aggregate 64.5% of the issued capital in the Company.

On 18 December 2023, the Company received a revised non-binding and indicative off-market
takeover offer to acquire all of the MC Mining shares that it currently does not own for a cash price of
A$0.16 per share from a consortium representing 64.3% and including Senosi Group Investment
Holdings Proprietary Limited and Dendocept Proprietary Limited.

As previously advised, the Company has established an Independent Board Committee (“IBC”) which,
with its advisors, is considering the revised offer and will provide a recommendation to MC Mining
shareholders if and when it is in possession of an offer capable of acceptance by shareholders.

The Company would like to reiterate to shareholders that management continue to focus on building
a successful and profitable Company for the benefit of all shareholders and is excited by the current
state of the Company and its prospects. Again, there is no need for shareholders to take any action
with respect to the current non-binding indicative proposal.


Godfrey Gomwe, Managing Director & Chief Executive Officer, commented:
“Whilst MC Mining has experienced some challenges in the last 12 months, I remain extremely excited
by the prospects of the business moving forward.
The commissioning and expected commencement of production and development works at Makhado
in 2024 will mark a significant milestone for MC Mining and has the potential to create a world class
coal production facility for South Africa. We still have some pieces of the puzzle to complete, not least
of which being able to complete an optimal funding pathway under an accelerated programme, but I
am confident that our team can bring this project online and within budget.
The Uitkomst Colliery remains an important asset for the Company and I am pleased we have made
some great progress though Operation Phenduka, resulting in significant improvements in both safety
as well as production. The prevailing domestic and international coal market conditions have also
resulted in the colliery assessing its product portfolio to optimise revenue and this initiative will
continue in Q1 CY2024.
The outsourcing of mining and processing operations at Vele secured the necessary investment from
a third party to modify the CHPP and recommence operations at the colliery. This added a potential
cash generating unit to MC Mining’s portfolio with limited financial or human capital contributions
and the recommencement of operations also removed the ‘use it or lose it’ risk associated with
unutilised mining assets in South Africa, as Vele had been on care and maintenance for almost ten
years.”

Godfrey Gomwe
Managing Director & Chief Executive Officer

This announcement has been approved by the Company’s Disclosure Committee.

The information contained within this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended.


   For more information contact:
   Tony Bevan                        Company Secretary            Endeavour Corporate             +61 8 9316 9100
                                                                  Services
   Company advisors:
   Richard Johnson / Rob              Nominated Adviser           Strand Hanson Limited           +44 20 7409 3494
   Patrick
   Rory Scott                         Broker (AIM)                Tennyson Securities             +44 20 7186 9031

   Marion Brower                     Financial PR (South         R&A Strategic                    +27 11 880 3924
                                     Africa)                     Communications
   BSM Sponsors Proprietary Limited is the nominated JSE Sponsor

   About MC Mining Limited:

   MC Mining is an AIM/ASX/JSE-listed coal exploration, development and mining company operating in South Africa. MC
   Mining’s key projects include the Uitkomst Colliery (steelmaking and thermal coal), Makhado Project (steelmaking hard
   coking coal), Vele Colliery (steelmaking semi-soft coking and thermal coal), and the Greater Soutpansberg Projects
   (steelmaking coking and thermal coal).