African Reserves Loans

MC MINING LIMITED – US$5.6 million capital raised – SENS

                            

Capital Raising US$5.6 million

MC Mining Limited
Previously Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000MCM9
JSE share code: MCZ
ASX/AIM code: MCM

1 February 2022

Capital Raising US$5.6 million

MC Mining Limited (MCM or the Company) is pleased to announce it has entered into a
staged ZAR86,036,691 (86 million South African Rand) (approximately US$5.6 million/A$7.9
million) Convertible Advance and Subscription Agreement (the Agreement) with South
African based mining group, Senosi Group Investment Holdings Proprietary Limited (SGIH).

Pursuant to the Agreement, the initial share subscription by SGIH is limited to 38,363,909
new ordinary shares of no par value in the Company’s capital (Ordinary Shares) (the First
Tranche Shares) to be issued at ZAR1.20 (US$0.08/ A$0.11) per share (the Issue Price), to
raise ZAR46,036,691 in equity (the First Tranche Funding) and, subject to certain regulatory
approvals, will result in SGIH owing 19.9% of the Company’s issued shares.

SGIH has also conditionally agreed to subscribe for a second tranche of 33,333,333 new
Ordinary Shares (the Second Tranche Shares) (together with the First Tranche Shares, the
Placement Shares) at the Issue Price, raising the balance of ZAR40,000,000 (the Second
Tranche Funding), which, subject to the receipt of all required approvals, will result in SGIH
holding an aggregate interest in the Company’s enlarged share capital of approximately
31.71% (assuming no further shares are issued in the interim).

The Issue Price equates to a 7.1% premium to the Company’s closing price as quoted on
the JSE on Monday 31 January 2022.

The issue of the Placement Shares by the Company to SGIH is subject to certain customary
approvals by the ASX and JSE, and conditional on the prior approval of South Africa’s
Reserve Bank, which is expected to take several weeks. Furthermore, the issue of the
Second Tranche Shares will require the prior approval of Company’s shareholders as the
combined interest of SGIH, will result in a combined ownership interest in MCM exceeding
20%. The Notice of Meeting will include a report from an independent expert to opine on
whether the issue of the Placement Shares is fair and reasonable to non-associated
shareholders.

Accordingly, given the anticipated lead time for obtaining the abovementioned South
African Reserve Bank and MCM shareholder approval, SGIH has agreed to advance funds
to the Company by the way of a loan, which will subsequently convert into the First
Tranche Shares on the later of the date falling 5 business days following the date on which
the final instalment of the First Tranche Funding has been advanced and the date on
which the relevant approvals have been obtained. The first two instalments of the Second
Tranche Funding will also be advanced as a loan and Second Tranche Shares will be
issued as and when the requisite approvals have been obtained. If the relevant approvals
have not been obtained on or before 29 June 2022, the final 2 instalments of the Second
Tranche Funding will not be advanced, and the loans will become repayable as set out
below. The timing and amount of loan funds to be provided by SGIH is as set out below:

First Tranche Funding:

Date ZAR
The first business day following the effective date of the Agreement 10,000,000
(anticipated to be the first week of February 2022)
23 February 2022 30,000,000
31 March 2022 6,036,691
Total 46,036,691

As stated above the total ZAR46,036,691 SGIH loan will convert to the First Tranche Shares
once the total First Tranche Funding has been advanced, provided that South African
Reserve Bank approval has been obtained. The First Tranche Funding is secured against
shares in MCM’s wholly owned subsidiaries, Limpopo Coal Company (Pty) Ltd and Harissa
Investment Holdings (Pty) Ltd. This security will be released when the First Tranche Funding
is repaid or the First Tranche Shares are issued. The Second Tranche Funding will not be
secured.

Second Tranche Funding:

Date ZAR
30 April 2022 10,000,000
31 May 2022 10,000,000
30 June 2022 10,000,000
31 July 2022 10,000,000
Total 40,000,000

As stated above, the total ZAR40,000,000 Second Tranche Funding will convert to the
Second Tranche Shares as and when South African Reserve Bank approval is obtained
and the necessary shareholder approval is received. To the extent that the
aforementioned approvals are obtained prior to the abovementioned dates, the relevant
Placement Shares will be issued in tranches directly to SGIH against payment of the
subscription amounts at the Issue Price.

The First Tranche Funding will be used to settle the balance owing to the vendors of the
Lukin and Salaita properties, due by 28 February 2022, as announced on 11 January 2022,
and to supplement the MCM group working capital requirements.

The Second Tranche Funding will be used to advance development of the Makhado hard
coking coal project and to supplement the MCM group’s working capital requirements.
Based on prevailing forward API4 coal prices and management of Group facilities, the
funding from SGIH is expected to extend the cash runway to at least August 2022.

It is important to note that the conversion of the Second Tranche Funding is expressly
subject to shareholder approval, including under the ASX Listing Rules and item 7 of
section 611 of the Corporations Act 2001.

SGIH is a substantial mining house with investments in coal mining, contract mining,
commodity trading, gold mining, energy, engineering and property.

SGIH’s coal mining interests are held through its wholly owned subsidiaries, which produce
over eight million tons of run of mine (ROM) coal per year and are targeting to increase
ROM production to 12 million tons in 2022. SGIH’s group companies supply approximately
4 million tonnes of coal per annum to the local electricity utility Eskom and exports 3.5
million tonnes of coal per annum through the Richards Bay Coal Terminal. SGIH controls
over 300 million tonnes of coal Resources and Reserves through its coal mining subsidiaries.
All SGIH’s collieries are located in the Highveld and Witbank Coalfields of the
Mpumalanga Province of South Africa.

The SGIH group chief executive officer and controlling shareholder is Mr Ontiretse
Mathews Senosi. Mr Senosi is, subject to completion of the relevant regulatory and
customary due diligence processes, to be appointed a director of the Company on
completion of the issue of the First Tranche Shares. A further announcement will be made
in this regard in due course.

Mr Senosi is a mining engineer having completed his degree and also a Graduate
Diploma in Engineering at the University of the Witwatersrand in South Africa. He gained
experience at Anglo Coal before pursuing his own business interests. He has substantial
experience in mining engineering consulting, feasibility studies, mine optimisation projects
and several civil, building and construction contracts for over 20 years. Since 2008, Mr
Senosi is also an experienced company director of various companies including
underground mine contractors.

Mr Bernard Pryor, MC Mining’s Chairman, commented:
“We are very pleased Mr Senosi has agreed to invest in our Company and to also join our
board of directors. His successful track record of developing and operating coal mines in
South Africa will be invaluable as we move closer to finalising the funding requirements to
develop our flagship Makhado project.”

The more detailed terms of the Convertible Advance and Subscription Agreement are as
follows:

MATERIAL TERMS OF CONVERTIBLE ADVANCE AND SUBSCRIPTION
AGREEMENT
Name of Contract Convertible Advance and Subscription Agreement
Parties MC Mining Limited (MCM) as Guarantor, MCM’s
subsidiaries, Limpopo Coal Company Proprietary Limited
as borrower (Borrower) and Harrisia Investment Holdings
Proprietary Limited, and Senosi Group Investment
Holdings Proprietary Limited as lender and subscriber
Execution On or around 31 January 2022
Loan ZAR86,036,691 or approximately A$7.9 million
Use of Loan The ZAR46,036,691 first tranche: Principally required for
MCM to make payment of the sum of ZAR35,000,000
under a deferred payment arrangement for land
acquired under a sale and purchase agreement due
on 28 February 2022. The balance of ZAR11,036,691 will
be used for working capital; and
The ZAR40,000,000 second tranche: Principally required
to advance development of the Makhado hard coking
and thermal coal project and for working capital.
Interest The Loan is interest free, unless the relevant approvals
required in order to issue the Placement Shares are not
obtained in which event the loans will bear interests at
the South African prime rate.
Condition of Conversion The first tranche of ZA46,031,691 is to convert into shares
in the Company, subject to ASX, AIM and JSE approval,
only after South Africa’s Reserve Bank approval has
been obtained and the full amount of the first tranche
has been advanced to the Borrower. The second
tranche of ZAR40,000,000 is to convert into shares in the
Company only after South Africa’s Reserve Bank and all
other required shareholder and regulatory approvals,
including under the ASX Listing Rules and section 611 of
the Corporations Act 2001, have been obtained.
Conversion Subject to all applicable laws and required approvals,
and except as otherwise provided, providing the Loans
remain outstanding, the Loans shall convert into MCM
Shares as soon as reasonably practicable following the
date on which the applicable conditions are satisfied
and the number of MCM Shares to be issued shall be
determined by dividing the principal amount of the Loan
outstanding to be converted by ZAR1.20.

Conversion/ Repayment The Loans will convert when the respective conditions for
Date conversion have been satisfied as set out above,
provided that;
(a) If the first tranche conversion condition has not
been satisfied on or before 29 June 2022 or such
later date agreed by the parties, that loan plus
interest shall be repaid 30 calendar days
thereafter; and
(b) If the second tranche conversion conditions have
not been satisfied on or before 29 June 2022, or
such later date agreed by the parties, that loan
plus interest shall be repaid 30 calendar days
thereafter.
Placement To the extent that the required approvals for the issue of
the Placement Shares are obtained prior to the date on
which any portion of Loan is the be advanced by SGIH,
SGIH has agreed to directly subscribe for the Placement
Shares in tranches on the same basis as the Loans were
to be advanced.
Security As security for the repayment of the first tranche, the
Company has agreed:
(a) to pledge and cede in security all of its right title
and interest in and to its shares in the Borrower
and its wholly owned group company, Harissa
Investment Holdings (Pty) Ltd. Enforcement by
SGIH will be subject to compliance with the
requirements of the Mineral and Petroleum
Resources Development Act or other regulatory
approvals, as applicable; and

(b) to subordinate the intercompany loans in the
Borrower and Harrisia in favour of SGIH.
The security will be released as soon as the first tranche is
repaid or converted.
The second tranche will not be secured.
Note:
Exchanged rates used in this announcement are:

US$1.00 = ZAR15.24
A$1.00 = ZAR10.90

This announcement is inside information for the purposes of Article 7 of Regulation
596/2014 as amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019.

This announcement has been approved by the Company’s disclosure committee.
ASX: MCM / AIM: MCM.L / JSE: MCZ

For more information contact:
Sam Randazzo Interim Chief MC Mining Limited +61 408 945010
Executive Officer

Tony Bevan Company Endeavour +618 9316 9100
Secretary Corporate Services
Company advisors:
James Harris / James Nominated Strand Hanson +44 20 7409
Dance Adviser Limited 3494

Rory Scott Broker (AIM) Tennyson Securities +44 20 7186
9031

James Duncan Financial PR (South R&A Strategic +27 11 880 3924
Africa) Communications

Investec Bank Limited is the nominated JSE Sponsor

About MC Mining Limited

MC Mining is an AIM/ASX/JSE-listed coal exploration, development and mining company
operating in South Africa. MC Mining’s key projects include the Uitkomst Colliery
(metallurgical and thermal coal), Makhado Project (hard coking coal). Vele Colliery
(semi-soft coking and thermal coal), and the Greater Soutpansberg Projects (coking and
thermal coal).

Date: 01-02-2022 09:15:00
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