Makhado

What level of coking-coal price is needed to make Makhado viable?

Mirabaud reports CZA essentially represents a large, cheap option on a long-term recovery in coking-coal prices

The subsequent weakening of the South African rand has significantly reduced the coking-coal price needed to make Makhado viable, but in our estimation the project is still some way ‘out of the money’. The challenge for CZA has thus been to prolong the life of the Makhado ‘option’ until the coking coal market comes back into balance and prices recover, a process which we believe may take years, rather than months, and thus argues for a long-term cash flow to make CZA independent of the need for further equity injections if/when its current working capital is exhausted.