12 December 2012

Zimbabwe: BNC Needs U.S$20 Million Fresh Capital

BINDURA Nickel Corporation says it will require fresh capital injection of US$20 million in its second year after resuming operations. The firm has been under care and maintenance since 2008, after succumbing to volatile metal prices on global markets and crippling economic challenges in Zimbabwe.

BNC is set to resume production early next year after raising US$21 million through a rights issue.

The rights issue funding would be used to restart operations at Trojan Mine, which will require a staff complement of 990, down from the previous level of 2 016.

But fund-raising and the restart were premised on condition that BNC settles its liabilities with workers and creditors, concluded through the issue of US$11,5 million private placement of BNC shares.

"Additional funding of approximately US$20 million will be required in the second year after the rights issue and private placement. This will be secured through debt finance and the process has started.

"The directors are confident that there will be a successful outcome," said chairman Mr Kalaa Mpinga.

He said directors were confident that the rights offer proceeds would be sufficient to carry the nickel producer through the 12 months after the restart.

In anticipation of the restart programme, BNC undertook works aimed at overhauling key engineering and operational infrastructure, including pumping arrangements, ventilation fans and shaft guides.

These surface works also saw the re-engineering of the waste handling system together with the major overhaul of surface secondary and tertiary crushers.

Thus far the preparatory work for the restart of operations has included limited underground development, commissioning of LHD loaders, rigs, associated mining as well as key engineering services.

BNC said that the ore and waste hoisted to the surface has enabled successful hot commissioning of surface waste conveyors and ore crushing facilities.

Furthermore, after the rights issue and private placement, a programme to refurbish mills began, allowing for the restart of operations in the first quarter of next year when the first concentrate will be sold. The recapitalisation and preparatory work has not included its other nickel mine, Shangani, and its smelter and refinery plant.

But Africa's only integrated nickel mine has said nickel prices would remain under pressure in the near future due to excess stockpiles in Chinese ports and a number of nickel projects set to come on line this year.

BNC, which has not undertaken nickel production since going into care and maintenance in 2008, reported US$900 000 revenue and US$7,8 million after tax loss in the six months to September 30 2012.

The company said current liabilities decreased to US$25,2 million from US$39,4 million in the comparative period last year due to reduction in trade creditors and the reclassification of a US$8,5 million short-term debt into long term.

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