BNC recapitalisation bid flops

LISTED miner Bindura Nickel Corporation Limited (BNC) says its plans to raise $20 million additional capital have failed.

The Mwana Africa plc (Mwana) subsidiary said the funds were intended to finance the second phase of restarting operations at its mothballed Trojan Mine.

“The difficulties are attributable to the negative market sentiment associated with the falling nickel price, coupled with the challenging capital markets, and this has created a funding shortfall at the company,” said BNC yesterday.

The nickel producer — which recently restarted operations after a four-year closure following a $23 million capital injection last year — said the acute liquidity challenges prevailing in the market also hampered its chances of securing the required funding through debt finance.

Due to oversupply and competition by a substitute material, nickel prices have dropped nearly 13 percent this year from $17 500 per metric tonne to $15 230.

On the other hand, Zimbabwe’s economy, which adopted a multi-currency system in 2009, has been battling liquidity challenges and limited lines of credit among other challenges, creating a tough operating environment.

Despite failing to secure the funds, BNC together with its largest shareholder Mwana, said they are “considering strategic options to preserve the integrity of the investment.” This comes as BNC, Africa’s only integrated nickel mine, made significant progress in the past year, including the completion of the financial restructuring in September 2012 and delivering the first nickel concentrate in April 2013.

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.

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

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

Its operations were suspended in late 2008 due to a combination of factors chief among them a dip in global metal prices and hyperinflation in Zimbabwe.

It was among hundreds of mining and non-mining companies that closed shop at the height of Zimbabwe’s economic turmoil.

These economic challenges hamstrung its capacity to pay workers and creditors resulting in the build-up of massive liabilities.

While negotiations on how the liabilities to creditors would be cleared were fairly easy, the process took longer with the workers.

This stalled BNC’s planned recapitalisation, but when an agreement was reached, both creditors and staff in total converted a value of $11,5 million of the liabilities to BNC shares.

Workers and creditors of the company now own 31,74 percent of BNC after the company placed 384 million shares as back pay, retrenchment package and settlement of other outstanding liabilities.

After a successful staff rationalisation programme BNC was left with about 1 000 workers, half of the total head count the firm had.

    Comments (1)

    vhurai mugodhi mhani kwete kunyepera nickel price.inside sources anoti you break even at 12 000 per metric tonne ko apa munochemei pa 15 000

    vincent chifamba - 29 June 2013

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