MC Mining Posts $36 Million Loss Amid Weaker Operations, Impairments, and Restructuring Push

Johannesburg and Sydney-listed coal miner MC Mining has reported a sharply widened after-tax loss of $36 million for the financial year ended 30 June 2025, compared to a $14.6 million loss in the previous year. The result, equal to $0.07 per share, reflects a 147% year-on-year increase in losses, largely driven by significant non-cash impairments and underwhelming operational performance.

Impairments and Revenue Decline Weigh on Results

The bulk of the loss was attributed to non-cash charges totalling $25.8 million, up from $3.3 million in the prior year. This included a $24.3 million impairment, mainly at the Uitkomst Colliery ($12.3 million) and the Greater Soutpansberg Projects (GSP) ($12 million). Despite a slight decrease in depreciation and amortisation to $1.4 million, the company’s revenue plummeted 52% to $17.5 million, while the cost of sales fell 34% to $24.1 million. This resulted in a gross loss of $6.6 million, reversing the break-even position from the previous year.

Operational results at MC Mining’s only producing asset, Uitkomst Colliery, were down across the board:

Run-of-mine coal output dropped 22% to 390,788 tonnes

Sales volumes fell 23% to 269,877 tonnes

Average revenue per tonne declined to $72/t (from $79/t)

Production costs surged 44% to $92/t, up from $64/t

These factors significantly eroded profitability and underscored the operational inefficiencies that have prompted a turnaround plan at Uitkomst, launched after year-end.

The company has now initiated a turnaround strategy aimed at improving operational performance and cutting costs. Measures include:

Upgrades to the coal handling and processing plant to improve yields

A workforce reduction from 430 to 366 employees, mainly through voluntary exits

The board expects these efforts to improve cash generation and profitability in the 2026 financial year.

While the headline loss per share narrowed 21% to $0.03, the basic and diluted loss per share nearly doubled to $0.07, reflecting the full impact of the impairments. No dividend was declared for the year.

Despite the overall weak financials, administrative expenses were cut by 55% to $6.9 million, driven by reductions in staff costs, professional fees, and overheads. Finance costs increased modestly by 7% to $1.6 million.

MC Mining ended the year with unrestricted cash balances of $7.4 million, a significant improvement from just $200,000 the previous year. Its net asset value rose 10% to $83.2 million, helped in part by new strategic investment.

However, the company acknowledged a material uncertainty about its ability to continue as a going concern, citing the need for ongoing funding and successful project execution. The board said it was appropriate to prepare financial statements on a going concern basis, given recent funding progress and restructuring efforts.

A major development during the year was the entry of Kinetic Development Group (KDG) as a strategic investor. The first tranche of a larger funding deal was completed in August 2024, giving KDG a 13.04% stake for $12.97 million. A second tranche valued at $77 million, payable in nine instalments tied to project milestones, was approved by shareholders in January 2025.

Once completed, the deal will give KDG a 51% controlling stake in MC Mining. South Africa’s Competition Commission approved the transaction in December 2024, subject to conditions.

Makhado Project Progresses Toward First Coal in 2026

MC Mining’s flagship Makhado project advanced significantly during the year and is now described as fully licensed and shovel-ready. The company began site works and secured contracts for:

Coal handling and processing plant construction

Contract mining services

First coal production is targeted for Q1 2026.

In the meantime, activities at the Vele Aluwani Colliery and the GSP (comprising Chapudi, Mopane, and Generaal project areas with over 7 billion tonnes of inferred coal resources) were limited to regulatory compliance and asset maintenance.

During the year, MC Mining settled a R120 million loan with the Industrial Development Corporation of South Africa, dating back to 2017. It also secured a $700,000 interim loan from Eagle Canyon International Group, linked to CEO Yi (Christine) He, which has since been repaid.

Following the KDG tranche and debt settlement, the company’s available cash and facilities peaked at $12.9 million at the end of September 2024.

Forward Plans: More Funding, Offtake Agreements, and Cost Controls

Looking ahead, the company plans to:

Unlock further KDG funding tranches as Makhado milestones are achieved

Conclude a R250 million working capital facility by Q1 2026

Secure long-term coal offtake agreements to reduce price volatility

These efforts are expected to stabilise operations and provide sufficient liquidity for at least the next 12 months.

However, the board cautioned that future success remains contingent on the timely receipt of KDG funding and execution of the turnaround strategy. Certainty over the company’s long-term viability will depend on the successful commissioning of Makhado and its ability to generate sustained positive cash flows.

MC Mining’s 2025 financial year was marked by significant losses, impairments, and operational challenges. However, improved liquidity, progress at Makhado, and a strategic investment by KDG offer a potential path to recovery—if the company can successfully deliver on its restructuring plans and funding milestones.

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