MC Mining is transitioning to owner-operator at its Uitkomst coal mine in KwaZulu Natal, South Africa, after agreeing to buy all of the mining equipment from former contractor, Khethekile Mining.

Under the terms of the R65 milion ($4.9 million) deal, MC Mining’s Uitkomst subsidiary will acquire Khethekile’s mining equipment, including conveyor systems and coal mining and transportation equipment, and take on some 340 Khethekile employees working at the mine and at Khethekile’s Newcastle offices.

Uitkomst, which MC Mining acquired in June 2017 as part of a R275 million deal with Pan African Resources, has a remaining mine life (including extensions) of approximately 16 years.

MC Mining said: “The insourcing of underground mining operations at Uitkomst is an opportunity to progress the overall performance at the colliery and facilitates the implementation of a number of initiatives, including enhanced control of production costs as well as improved asset availability leading to increased run-of-mine (ROM) coal production.”

The mine produces high-grade thermal export quality coal with metallurgical applications and consists of an existing underground coal mine (Uitkomst – South mine) and a planned life of mine extension into the northern area (Klipspruit – North mine).

The deal includes a cash consideration of R16.4 million and the assumption of the face value, as at August 1, of loans, trade payables and accrued expenses, together totalling R48.6 million.

The direct control of Uitkomst mining operations is expected to result in a steady increase in output, and the mine is expected to exceed production levels seen during the 2018 financial year to end June (505,130 ROM) during its next financial year.