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Oliver Kazunga Business Reporter
PAN-African firm Mwana Africa has announced its subsidiary Bindura Nickel Corporation (BNC) has been unable to raise additional funding to finance the second phase of the restart of Trojan Mine. Financing of the restart of Trojan Mine was expected to come through debt as had been at the time of the September 2012 rights offer and private placement by BNC.
Mwana Africa attributed the funding failure to the difficulties driven by the negative market sentiment on the back of falling nickel prices, coupled with capital markets, and this has created a funding shortfall at BNC.
“Despite making significant progress at BNC over the past year including the completion of the financial restructuring in September 2012 and delivering first nickel in concentrate in April 2013, BNC has so far been unable to raise additional funding through debt to finance phase two of the restart of Trojan Mine as had been anticipated at the time of the September 2012 rights offer and private placement by BNC.
“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 BNC,” said the Pan-African and multi-commodity and development company.
It added that while Freda Rebecca Gold Mine, which is owned by BNC, remains cash generative, its cash contribution to the group in recent months has fallen in light of lower gold prices.
The Mwana board has therefore embarked on a significant cost cutting exercise targeting annualised savings from budgeted corporate costs of about $5 million.
The board is also considering strategic options in relation to its assets and projects including BNC and Zani Kodo in the Democratic Republic of Congo.
“Operationally Freda Rebecca continues to perform well and the pilot plant project to test the viability of treating Freda Rebecca’s tailings dumps continues.”
Having restarted operations in 2009, Freda Rebecca produced 65 350 ounces of gold in the 12 months to March 2013.
The restart of operations at Trojan followed four years during which all of the BNC assets were under care and maintenance.
In September last year, BNC carried out a restructuring and recapitalisation porgramme involving $23m being invested into the nickel corporation which has allowed it to restart the Trojan mine.
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