BNC remains in the red

HARARE - Zimbabwe Stock Exchange-listed resources group Bindura Nickel Corporation (BNC) remains in the red, incurring a $12,9 million loss in the year to March 31, 2013.

The nickel producer recorded a $12,7 million loss in the previous comparable period.

Conrad Mukanganga, BNC company secretary attributed the loss to low turnover and care and maintenance costs.

“The results for the year under review are in line with what would be expected from a business on care and maintenance and one which is starting up operations,” he said.

Included in the loss for current year is $7,1 million relating to retrenchment costs arising from the restructuring of the company.

The group’s non-current assets increased year on year to $44,2 million from $35,1 million recorded in 2012.

Mukanganga said the increase in non-current assets was as a result of the capitalisation costs as well as the capitalisation costs associated with the refurbishment of the million section at Trojan mine.

Early this year BNC indicated that it was examining alternative mine plans with the objective of improving short-term cash flow and reducing its funding requirement.

Mwana Africa, BNC’s parent company, said the new mine plans would use the mining flexibility afforded by the presence of higher-grade massive sulphide ore in the Trojan orebody.

The company was in the process of seeking short-term bridging finance to cover its funding shortfall and continued to focus on the preservation and integrity of the business and its assets.

The depressing set of results released by BNC comes after Mwana Africa recently announced that it was tightening its belt in response to the new lower-priced minerals environment that had plunged a number of Aim-listed miners into uncertainty.

“…due to a sustained decline in… the prices of gold and nickel, we have embarked on a significant cost-cutting exercise at corporate and project levels,” said Mwana chief executive Kalaa Mpinga in his report for the quarter ended June 2013.

“In response to lower nickel prices we are also reviewing a revised mine plan at Trojan which considers focusing mining efforts on the higher grade massive,” he said, adding the period under review had “brought mixed fortunes for the mining conglomerate.”

Nickel prices are bearing the brunt of a steep decline in the metals markets this year with futures falling as low as $13,205 a metric tonne last Tuesday on the London Metal Exchange, its lowest price since May 2009.

Prices have dropped 22 percent since the start of the year.

On the other hand, gold slid to a low of $1 192 per ounce on June 28, a level not seen since mid-2010, and despite a recent rebound taking the metal to a range of  $1 200 per ounce to $1 300 per ounce in July, prices are still well below the high of $1 889 per ounce in 2011.

BNC recently restarted operations at its Mashonaland Central-based nickel miner Trojan — which had been mothballed in 2008 due to, then, prevailing nickel market conditions and hyperinflation concerns in Zimbabwe.

During the period under review, Mpinga said, an exceptional amount of effort was also made into Trojan’s full restart while “much progress has been made culminating in sale of first concentrate in April”.

 

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