adminboost after shareholders approved a proposal for a US$10 million convertible loan from major shareholder Mwana Africa.
The nickel extractor needs the funding for care and maintenance activities while it seeks funding to restart the suspended mining activities. BNC decided to seek help from Mwana Africa after the nickel failed to secure affordable funding from local financial institutions. The AIM-listed firm owns 52,9 percent shareholding in BNC.
A recent competent person’s report compiled by SRK Consulting of UK established that BNC requires US$26 million to restart Trojan Mine. The firm suspended production in 2008, at the height of Zimbabwe’s economic downturn, and put the mine under care and maintenance. Its fortunes were also affected by a plunge in global metal prices.
BNC chairperson Mr Kalaa Mpinga said expensive short-term loans by local banks constrain capacity to generate revenue and service debts. He said BNC needed funding as it could soon run out of money to meet essential care and maintenance obligations, pay creditors and workers.
“The loan is therefore crucial for the preservation of the company’s assets while restart funding is sought, and a necessary precondition for restarting the company’s operations,” Mr Mpinga said.
Mwana Africa non-executive chairman Mr Oliver Barring a fortnight ago said despite constraints around securing funding for local projects the strategy to grow production in Zimbabwe remained correct.
If the US$10 million loan facility were converted to equity, it would increase Mwana Africa’s shareholding in BNC to 74 percent from 53 percent.
Mr Mpinga said BNC almost secured an offshore loan facility in March this year, but negotiations allegedly collapsed on indigenisation concerns.
In contrast, Mwana Africa’s Freda Rebecca Gold Mine could exceed its year-end production target of 50 000 ounces after monthly output rose to an average 4 500oz.
Freda Rebecca general manager Mr Toindepi Muganyi last week said output had risen significantly and set the firm on a firm path to exceed its phase target.
“We are producing at a rate of 4 500 ounces per month, which exceeds our phase two target of 50 000 ounces. We have operated at
100 000 ounces per year before and we can get back to those production levels,” he said.
Production topped 27 2400oz in period to March 2011 compared to 112 164oz in 2000 before output took a dip due to serious economic downturn.
Freda Rebecca plans to increase annual production to 70 000 ounces provided decision is approved by the board and financial resources permit.
The firm has all eyes on ramping up production in the wake of bullish gold prices on international markets and liberalised foreign exchange rules.
Gold prices have rallied beyond the
US$1 900 mark and look set to remain bullish in the foreseeable future on gloomy global economic outlook.
Online Reporter