Mwana profit down 86pc

HARARE – London-listed Mwana Africa Plc (Mwana) profit slumped 86 percent to $7 million in the full year to March 31, 2015 from $50,6 million due to high unit costs.

However, Mwana executive chairman Yat Hoi Ning yesterday said despite the latest setbacks, the resources firm has set its eyes on opportunities in other southern African countries, particularly the Democratic Republic of Congo (DRC).

“But the likelihood is that any such opportunities will be seized in partnership with others who can provide funding and skills, as is the case with our copper exploration in the DRC,” he said.

Ning noted that the mining giant – currently on a recovery path after resuming its mothballed operations in Zimbabwe in 2012 – was now focused on ensuring that its financial and technical foundations are sufficiently firm.

Mwana, which recently parted ways with its founder and chief executive Kalaa Mpinga, experienced a tough year in the period under review marked by some technical difficulties and a few success stories.

“The past year’s major challenge, on the other hand, was to continue to generate cash in a commodities regime where prices and demand have been substantially lower than a year ago,” Ning said adding that price weakness was particularly marked in nickel during the second half of the year under review.

“This was exacerbated in the fourth quarter by the disruptions resulting from the continuing work on replacing Trojan’s development rigs and its fleet of mobile equipment. This programme was subsequently completed during the fourth quarter and the slow development rates which delayed entry into the mine’s higher grade massive reefs were thus addressed,” he said.

While development work and extraction of the massive reefs was delayed in the year’s first six months, international nickel prices responded to supply deficits caused in part by Indonesia’s continuing prohibition on exports of unrefined metal.

This somewhat artificial market boost was counteracted during the year’s second half as China’s economic slow-down curbed demand for stainless steel and, by extension, nickel. Slackening demand also persuaded Chinese holders of nickel stocks to lighten their holdings.

The Mwana boss noted that at Freda Rebecca gold mine production stagnated as a result of equipment failures that needed to be addressed and improvements that were effected on an ad hoc basis.
These technical problems were paralleled at Bindura Nickel’s Trojan mine where a large part of the mine’s equipment had been allowed to deteriorate during the period of care and maintenance, and needed to be progressively refurbished and replaced throughout the year.

“The planned re-start of Bindura Nickel’s smelter was initiated during the past year at a budgeted cost of $22 million, with internal financing augmented by the issue of a $20 million five-year bond. The smelter will have the capacity to process Trojan’s own concentrates and to toll-treat outsiders’ concentrates to produce nickel leach alloy. The bond will be serviced from revenues enhanced by the smelter’s operations,” he said.

In the period under review, Mwana registered consolidated revenue of $152,3 million notwithstanding challenges of falling gold and nickel prices.

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