MC Mining has signed heads of agreements with Chinese construction enterprise China Railway International Group Co Ltd that could see the firm finance and carry out the construction of the coal handling and processing plant for the Makhado project in the Limpopo Province of South Africa.

Under the terms of the HOAs, MC Mining and CRIG have agreed to negotiate a package that comprises the engineering, procurement and construction (EPC) for Makhado’s plant, financing for 85% of the EPC costs, and contract mining operations.

Makhado is envisaged as 12.6 Mt/y run of mine open-pit coal mine yielding 2.3 Mt/y of hard coking coal and 3.2 Mt/y of thermal coal for domestic or export markets. In the company’s latest interim results presentation, MC Mining pegged the construction capital and period at $79 million and 12 months, respectively,

The HOA agreements with CRIG are conditional upon the final terms and conditions being signed by June 2019. This includes completion of the Makhado front end engineering and design study and agreement on the EPC contract price by both parties, as well as appropriate funding provided on acceptable terms.

“The development of the Makhado project is expected to facilitate economic growth in the Limpopo province and the company will keep the market appraised on further progress with regards to the ongoing discussions with CRIG,” MC Mining said.

Offtake discussions for hard coking and export thermal coal production from Makhado are currently ongoing with various parties, it added.

The agreements follow swiftly on the heels of MC Mining receiving a positive ruling from local and national regulators in relation to the project’s Environmental Authorisation.