BNC struggles to keep afloat

BNC restarted operations in the last quarter of 2012 after raising US$23 million through a rights issue. But the company’s management indicated it required an additional US$10 million to attain a positive cash generating stage and achieve annual production level of
7 000 tonnes of concentrate.

“The company advises that despite making significant progress at BNC, including the completion of the financial restructuring in September 2012 and delivering the first nickel concentrate in April 2013, the company has been unable to raise additional funding through debt, to finance phase two of the restart of Trojan Mine as previously anticipated. The board and Mwana Africa Plc are considering strategic options to preserve the integrity of the investment,” said BNC.

Mwana Africa, through its subsidiary Zimnick, owns 76,5 percent shareholding in BNC after underwriting the rights issue. Trojan and the Smelter and Refinery were placed on care and maintenance in 2008 due to continued operating difficulties in Zimbabwe and a sharp decline in nickel prices.

Analysts say it is unlikely that Mwana Africa will go for another rights issue. “It can only be a private placement,” said one market analyst with a local research firm.
“Another rights offer is very unlikely as this will further dilute the current local shareholders and I don’t think they would like that.”

Last month, Mwana Africa chief executive Mr Kalaa Mpinga said the company was considering restarting its Bindura nickel smelter after a drop in prices
eroded profit margins on supplying the metal as concentrate.

“Nickel at this level is putting a lot of stress on the system, particularly when exporting concentrate,” Mr Mpinga told Bloomberg at the African Development Bank annual meeting in Morocco. “It will increase pressure on us to restart our smelter and refinery as soon as possible.”

Bindura would require an estimated US$60 million to restart its smelter and refinery plant, BNC chief operating officer Mr Batirai Manhando told Herald Business last year. Mwana’s Bindura site is the only integrated nickel mine, smelter and refinery operation in Africa, according to Mwana Africa’s website.