ASX- and JSE-listed coal exploration and mining company MC Mining has reported a significantly widened after-tax loss of $36-million for the financial year ended June 30, compared with a $14.6-million loss in the prior financial year, as impairments and weaker operating performance weighed heavily on results.

The loss, equal to $0.07 a share, reflects a 147% increase year-on-year and was driven primarily by non-cash charges of $25.8-million, up from $3.3-million in the prior period. These included a net impairment expense of $24.3-million, compared with $900 000 in 2024, while depreciation and amortisation decreased slightly to $1.4-million.

Revenue for the year declined by 52% to $17.5-million, down from $36.7-million in 2024, with cost of sales falling by 34% to $24.1-million from $36.5-million. This shift resulted in a gross loss of $6.6-million, compared with break-even levels in the prior year. Impairments included charges of $12.3-million at the Uitkomst colliery and $12-million at the Greater Soutpansberg Projects (GSP).

Administrative expenses fell sharply, decreasing by 55% from $15.4-million to $6.9-million, largely owing to reductions in employee costs, professional fees and overheads. Meanwhile, finance costs edged up 7% to $1.6-million.

Despite the wider headline loss, MC Mining ended the period with stronger liquidity, reporting unrestricted cash balances of $7.4-million compared with just $200 000 a year earlier. Its net asset value rose 10% to $83.2-million.

MC Mining’s headline loss a share narrowed slightly by 21% to $0.03, while its basic and diluted loss a share nearly doubled to $0.07. No dividend was declared.

Operationally, the Uitkomst colliery delivered weaker results. Run-of-mine coal output fell by 22% to 390 788 t, down from 498 589 t a year earlier. Sales volumes decreased by 23% to 269 877 t, comprising 256 882 t of premium duff and peas and 12 995 t of middlings.

Revenue generated from coal sales declined to $17.5-million from $27.7-million in 2024, reflecting both lower sales and a decrease in average revenue to $72/t from $79/t.

Higher costs added further pressure, with production costs increasing 44% to $92/t saleable, compared with $64/t in the previous year.

The company’s flagship Makhado project advanced meaningfully during the year and is described as fully licensed and shovel-ready. MC Mining began on-site work and secured key agreements covering the coal handling and processing plant and contract mining. First coal from the project is targeted for the first quarter of 2026.

At the Vele Aluwani colliery, activities remained limited to regulatory compliance and asset maintenance. Similarly, work at the GSP, which includes the Chapudi, Mopane and Generaal project areas containing more than seven-billion tonnes of inferred coal resources, was minimal during the year, with the focus on keeping the assets in good standing for future development.

A major corporate development was the strategic investment by Kinetic Development Group (KDG), which is set to result in KDG acquiring a 51% controlling stake in MC Mining once all funding tranches are completed.

The first tranche was completed in August 2024, giving KDG a 13.04% equity interest for $12.97-million. A second tranche valued at about $77-million, to be paid in nine staged instalments linked to project milestones, was approved by shareholders in January. South Africa’s Competition Commission granted clearance for the transaction in December last year, subject to conditions.

During the 2025 financial year, the company also entered into a settlement agreement with the Industrial Development Corporation of South Africa, repaying R120-million under a 2017 loan agreement. To support operations, MC Mining arranged an interim unsecured loan of $700 000 with Eagle Canyon International Group Holding, associated with MC Mining CEO Yi (Christine) He. This loan was settled in full during the period.

The completion of the initial KDG subscription tranche increased the company’s issued share capital by 62.1-million shares. As a result, available cash and facilities peaked at $12.9-million at the end of September 2024, before being drawn down for operating and project-related activities.

The company said this improved liquidity, together with the staged KDG funding, positions it to advance the development of Makhado, despite the pressures experienced in the reporting year.

MC Mining also acknowledged the material uncertainty around its ability to continue as a going concern, even as the directors expressed confidence that the ongoing funding arrangements and operational improvements will support the company over the next 12 months.

The company noted that significant doubt remained over its ability to realise assets and discharge liabilities in the normal course of business. The board, however, maintained that it was appropriate for the financial statements to be prepared on a going concern basis, citing progress in debt restructuring and funding commitments.

The directors pointed to the settlement agreement reached with the IDC and the staged $77-million strategic investment by KDG as measures that reduced the risk, though they conceded that certainty would only be achieved once the Makhado project was commissioned and producing positive cash flow.

To strengthen its liquidity, MC Mining said it would be pursuing several initiatives. These included the release of further KDG equity tranches aligned to Makhado’s development milestones, as well as a R250-million working capital facility application expected to be concluded in the first quarter of 2026.

The company said these measures, together with current cash reserves and facilities, would provide sufficient resources to meet obligations for at least the year ahead.

Subsequent to year-end, the company launched a turnaround plan at the Uitkomst colliery aimed at addressing operational inefficiencies and reducing costs. The plan includes reconfiguring the underground mining layout, modifying the coal handling and processing plant to improve yields, and cutting the workforce from 430 to 366 employees, largely through voluntary measures.

Management also said it intended to secure long-term coal offtake agreements to reduce price volatility and stabilise earnings. The company said these actions were expected to reduce operating costs, improve profitability and enhance cash generation in the 2026 financial year.

The board cautioned, however, that the company remained reliant on the timely receipt of KDG funding tranches and the successful execution of its turnaround initiatives.