LONDON-listed resources junior, Mwana Africa Limited, says it will ship at least 7 000 tonnes of nickel concentrate per annum to Swiss-headquartered global commodities giant, Glencore International once it restarts production at Bindura Nickel Corporation (BNC) in a few months' time.
In a statement accompanying Mwana Africa's results for the full-year to March 31, 2012, the mining group's chief executive officer, Kalaa Mpinga, said preparatory work for resumption of mining at BNC's Trojan Mine was advanced.
BNC had also focused on resolving legacy creditors and finalising a retrenchment programme, he said. "The restart plan for the Trojan Mine involves the production of 7 000 tonnes (Nickel) in concentrate per annum which will be sold to Glencore," Mpinga said.
"Detailed plans to recommence operations were drawn up by management and verified by SRK Consulting in a competent person's report, and an off-take agreement was signed with Glencore International," the statement added.
Mwana Africa owns a 52,9 percent stake in BNC, the only fully integrated nickel operation in Africa. Last month BNC shareholders approved a US$21 million rights issue to bankroll the restart of production at Trojan Mine, which has been under care and maintenance since the 2008 global financial crisis hit commodity prices.
Operations were also humstrung by a devastating economic turmoil in Zimbabwe. The Zimbabwe Stock Exc-hange-listed BNC last year signed an off-take agreement with Glen-core, one of the world's leading integrated producers and marketers of commodities, to cover all nickel concentrate to be produced at the restart of Trojan.
Under the deal, BNC will sell all nickel concentrate produced at Trojan to Glencore until the BNC smelter and refinery are restarted. Glencore will pay BNC a London Metal Exchange-linked price on agreed terms for final contained nickel. The deal will be effective within seven months of restart.
"Production ramp-up is very quick as would be expected and the operation should reach steady state production within 24 months," said Mpinga.
"There has been a great deal of progress made in priming the operation for restart including complete refurbishment of the crushing circuit," said the Mwana Africa boss.
Mwana Africa, which controls several gold assets in Zimbabwe and the Democratic Republic of Congo, had its capacity to finance the resumption of operations at the troubled Zimbabwean operation recently boosted by a US$21 million injection by a Chinese mining group, China International Mining Group Corporation.
It also controls Freda Rebecca gold mine in Zimbabwe. The group's revenues during the review period climbed by 86 percent to US$81, 3 million from US$43,7 million during the prior comparative period in 2011. Freda Rebecca contributed $79,8 million of the revenue, up from US$37,5 million in 2011.
Mwana Africa believes that economic and operating conditions in Zimbabwe and general nickel market condition are now conducive for the restart of operations at Trojan, which can treat up to 1,1 million tonnes of nickel per annum. Zimbabwe's economy is slowly recovering after a 10-year collapse, aided by a unity government between President Robert Mugabe and his rival, Prime Minister Morgan Tsvangirai.
The unity government abandoned the local currency, left worthless by world-record hyperinflation, and lifted controls that had strangled trade and investment between 2000 and 2008.