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Business Reporter
BINDURA Nickel Corporation is projected to attain cash positive position by the end of next month after overcoming its immediate funding constraints by revising its mining plan.
The projection is contained in the firm’s financial action plan based on assumptions of bearish nickel prices with the base case being current price of US$13 660 per tonne.
However, BNC remains positive on the base case scenario amid strong market indications that the price of nickel on global markets will rise in the long term.
It is expected that the projected cash flow will allow the firm to meet all its obligations under a revised mining plan that has reduced BNC’ funding requirements.
The Zimbabwe Stock Exchange listed Mwana Africa nickel mining subsidiary recently indicated that it requires US$4,5 million short-term bridging funding.
To that end, the revised mining plan for BNC’s Trojan Mine phase two restart will increase the average ore grade from 0,82 percent to 1,2 percent for the first three years.
Consequently, that would bring down costs to an average of US$12 770 per tonne from US$15 000/t over the first three years of implantation of the revised plan.
BNC revised its funding needs for phase two of the restart of its Trojan Mine in September last year since being put on care and maintenance in 2008.
Initially, Africa’s only integrated nickel mining and smelting company required a total of US$37 million, but managed to raise US$23 million last year with parent firm Mwana Africa putting in US$21 million through a rights issue.
While a total of US$15 million was required for phase two of the Trojan Mine ramp up efforts to raise the funding were hampered falling nickel prices, liquidity crunch on global capital markets and negative sentiment on Zimbabwe.
Nickel price plummeted on over supply in global markets with deliveries seen at 1,8 million tones against a projected 1,77 million tones while demand went down in major consumers China due substitute metal, pig iron.
Against this backdrop, BNC’ alternative was a revised mining plan targeting ore massives that would ordinarily have been mined later in the life of the mine.
“The overall effect of this strategy on life of mine would be timing issue only, with the total depleted nickel remaining the same,” reads an excerpt of BNC’ operational plan.
Trojan Mine is sitting on 114 000t of nickel confirmed in a competent person’s report carried on the mine last year by the UK’s SRK Consultants and confirmed again in February this year, extending the mine’s life from 8 to 15 years.
The effect of the new plan, dependent on the firm securing bridging finance, will be reduction of per unit costs due to high nickel content of massives.
BNC said the extraction of footwall massives with high grade nickel ore will contribute an additional 6 290 nickel metal in concentrates over for 18 months. Production will be ramped out to 870 000 processed ore per annum.
The company has made significant strides since securing equity funding in September last year to commencement of production in March this year and shipment of first concentrate in April to global commodity trader, Glencore International, with which BNC signed an off-take agreement for its nickel.
BNC is working on resolving the issue of historical creditors with US$7,8 million converted to equity while the payment of US$5 million was deferred to 2014.
Peter Tanyanyiwa
Online Reporter