Coal company MC Mining has resolved to temporarily maintain the suspension of mining and production operations at its Makhado project, in Limpopo, while the business and funding plan for the mine is reviewed and aligned with the C4 commissioning findings.

As previously advised, operations at the Makhado project were temporarily suspended on October 1 while the company finalised its funding arrangements. Operations at the Uitkomst and Vele collieries remain suspended, as previously advised.

C4 hot commissioning of the Makhado coal handling and preparation plant during the quarter ended September 30 demonstrated run-of-mine feed, coal washing and the production of hard coking coal (HCC) and thermal coal, with a demonstrated washing rate of about 7 600 t/d and HCC quality of about 10% ash.

C4 commissioning also identified areas where the mining and processing operations may require optimisation, including the front end feeder infrastructure.

Having regard to the C4 commissioning findings and the company’s funding position, the board has resolved to temporarily suspend operations at the Makhado project.

The temporary suspension period will allow the company to review the business plan for the mine and align it with the C4 commissioning findings, it says.

These include the mine plan, and the mining and processing improvements identified during C4 commissioning; the remaining capital expenditure programme, including completion of outstanding infrastructure; the funding required to complete critical project work and to restart operations; the contractor and operating arrangements required for restart; and the appropriate timing for restarting operations.

As part of the company’s broader cost-reduction and sustainability measures, the group has started voluntary severance process and invited qualifying South African employees to apply for voluntary separation packages. No final decision has been taken regarding compulsory retrenchments.

Meanwhile, the company’s controlling shareholder Kinetic Development Group (KDG) has agreed to provide a further $8-million of funding by way of an unsecured bridge loan, to be settled through a share subscription.

This follows the $8-million bridge loan announced in August and drawn during the quarter ended September 30.

Together, the two bridge loans represent the $16-million of capital support agreed with KDG, subject to shareholder approval of the related share issues.

The second bridge loan, together with the proceeds of the product sales referred to, is expected to fund the temporary suspension of the Makhado project, the workforce restructuring and the business plan review.

Yi (Christine) He has resigned as a nonexecutive director of the company with effect from November 9.