JSE-listed MC Mining CEO and MD Godfrey Gomwe says in an update on the Makhado hard coking coal (HCC) project that considerable progress has been made to convert previous mining studies into an implementation plan for the first five years of mining operation that is sufficiently detailed for the project execution with attractive economics.

“We are also pleased to now have an owner’s team in place, as well as a reputable and expert engineering, procurement and construction manager in Erudite,” he adds.

Gomwe informs that the peer-reviewed studies completed late in 2022 and the first quarter of this year have resulted in increased processing capacity, leading to higher production of hard coking coal, as well as the thermal coal by-product.

“The increase in product yields is also very pleasing and enhances the project economics.

“The company anticipates that the funding arrangements will be concluded early in the third quarter of this year, with the tender adjudication for major contractors, notably the mining contractor and coal handling and preparation plant (CHPP) operator, early in the third quarter, followed by the final investment decision soon thereafter, ensuring that the Makhado project execution processes are broadened from early works to include full-scale implementation,” Gomwe outlines.

He indicates that first coal production is expected 18 months from CHPP construction start-date.

“The appointment of EHL [Engineering] to proceed with the design and construction of the 14 km power line ensures that the supply of electricity to Makhado is in place prior to the commencement of operations,” Gomwe notes.

As alluded to, MC has made notable progress towards the completion of a detailed implementation plan for the first five years of mining and processing operations.

The company has limited technical execution capacity and with a strategy to limit fixed overhead costs, has secured this execution capacity by contracting an outsourced owner’s team and has also engaged key service providers to manage the implementation plan.

The plan includes a detailed execution plan for the construction of the East Pit, Makhado CHPP, related infrastructure and a detailed mine plan for the first five years of operations.

The key inputs of the Makhado project were independently peer-reviewed, and the implementation plan has been value-engineered, improving the accuracy of the studies from the prefeasibility study’s about 30% accuracy to an estimated accuracy of about 10%.

The company points out that owing to noteworthy improvements in the implementation plan, Makhado will produce an average of 880 000 t/y of HCC, compared to 540 000 t/y in the bankable feasibility study (an increase of 63%), while thermal coal production increases from 570 000 t/y to an average of 650 000 t/y (an increase of 14%) during the first five years of operation.

The higher volume of coal mined as well as CHPP processing capacity is anticipated to result in higher capital expenditure.

Erudite has completed the detailed designs for the mine infrastructure and CHPP and is in the process of obtaining detailed execution quotes for the construction of the CHPP.

This process is expected to be finished in July and will also cater for the enlarged mining and processing footprint. EHL Engineering has been engaged to design and build the bulk power supply infrastructure, a process on the construction critical path.

Enprotech has started the design and procurement of the flotation and filtration plant, a key part of the CHPP required to extract the HCC.

The flotation and filtration plant is expected to cost R155-million and the company has agreed in principle with Enprotec that this part of the plant will be constructed on a build, own, operate, transfer basis.

Makhado will be contractor-operated and, following the revised four-million-tonne-a-year mine plan, MC has started an open tender process to select a mining contractor.

The company also anticipates starting the processes to identify and appoint an outsourced CHPP operating contractor and analytical laboratory operator.

These processes are expected to be completed early in the third quarter.

First coal production is expected 18 months from commencement of construction, which is expected to occur in the second half of this year.

Early works associated with the implementation plan began in February, as planned, and these workstreams consist of activities with long lead times to ensure that social and regulatory licences are complied with.