Australia-based coal mining company MC Mining intends to sign a convertible advance and subscription agreement with Senosi Group Investment Holdings Proprietary to raise $5.6m.

Under the contract, South Africa-based Senosi will initially subscribe for 38.3 million shares in MC Mining to raise $2.96m (R46m). This will result in Senosi holding a 19.9% interest in MC Mining.

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The first tranche placement, however, will be conditional on some regulatory approvals.

Furthermore, Senosi conditionally agreed to subscribe for a second tranche of more than 33.3 million shares in MC Mining to raise a further $2.57m (R40m). This would result in the shareholding of a 31.71% interest in MC Mining.

The shares issuance to Senosi is subject to approval from the Australian Securities Exchange and Johannesburg Stock Exchange, as well as the South African Reserve Bank.

The firm plans to use the first tranche funding to pay the vendors of the Lukin and Salaita properties and to supplement its working capital requirements.

The second tranche is planned to be used by the firm to advance the development of the Makhado hard coking coal project in Limpopo province, South Africa, and fund working capital requirements.

MC Mining chairman Bernard Pryor said: “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.”