daniel chigunwe
Business Writer
Bindura Nickel Corporation (BNC), whose shares are currently suspended from trading on the Victoria Falls Stock Exchange and is now under a reconstruction order, is in a fix from low nickel prices against high operational costs and low resource grade.
A trading halt in shares of BNC took effect on May 6, 2024, following the placement of its major operating subsidiary, Trojan Nickel Mine Limited, under a reconstruction order.
According to managing director Thomas Lusiyano, BNC was carrying out the Sub-Vertical Rock (SVR) Winder Bull Gear Replacement Project, which necessitated a transient shutdown of BNC’s Trojan Nickel Mine from September 22, 2023, and was completed on April 12, 2024.
The SVR is one of the company’s major pieces of fixed mining equipment and is used to hoist ore from underground, and its deterioration subsequently resulted in the hoisting capacity of the SVR declining to just 25 percent of its installed capacity by September 2023.
According to Lusiyano, the SVR winder is, therefore, now ready and available for production; however, despite the completion of the SVR Project, the company continues to face several constraints that are likely to result in delays in the resumption of mining operations at TNM.
“As was reported in the trading update for the quarter that ended December 31, 2023, nickel prices remain depressed on global markets, at unsustainably low economic levels for the business.
“The currently prevailing low nickel prices come against a backdrop of high input costs, particularly the cost of electrical power, significant mining depth, and low resource grade, following the termination of high-grade massives,” he said.
To address the limited and deteriorating hoisting capacity problem, the company procured a replacement SVR bull gear, similar in size and duty, and initiated the SVR Bull Gear Replacement Project, necessitating a transient shutdown from September 22, 2023.
The project was initially scheduled for completion by October 31, 2023; however, it was extended to the end of February 2024 due to some technical challenges.
Lusiyano said BNC needs to mobilise the requisite capital for retooling, with particular emphasis on increasing the availability of underground mining mobile equipment and the processing plant.
He said assessments regarding the ramifications of these critical issues are ongoing, and the results of the assessments may have a material effect on the price of the company’s securities.
“Accordingly, shareholders and members of the investing public are advised to continue exercising caution when dealing in the company’s securities until a full announcement is made,” he said.
As a result of the shutdown, no ore was mined or milled, and no nickel concentrates were produced during the third quarter period to December 31, 2023.
In order to achieve long-term sustainability, the business recognises the need to implement strategic initiatives focused on full recovery and operational efficiency.
Analysts expect nickel prices to remain subdued in the last quarter of FY2024 and to settle at an average of US$17,000 per tonne during the calendar year 2024.
Global nickel prices are expected to remain under pressure during the calendar year 2024 due to the surplus in the nickel market coupled with weak demand.
In terms of overall performance for the nine-month period to December 31, 2023, the company mined 51,770 metric tonnes of ore, milled 50,907 metric tonnes of ore, and produced 275 metric tonnes of nickel in concentrate.
The average London Metals Market (LME) nickel price for the quarter of US$17,211 per tonne was 32 percent lower than the price of US$25,349 per tonne, which was realised in the same period prior year comparative.
During the period under review, tonnes of ore mined, at 177,179, decreased by 37 percent in comparison to 281,560 tonnes achieved for the same period last year.
Head grade, at 1,10 percent, declined by 19 percent from the 1,35 percent attained in the comparable period last year due to the down-dip reduction in the footprint of the high-grade resource.
Consequently, nickel in concentrates produced, at 1,314 metric tonnes, was 40 percent lower than the 2,192 metric tonnes recorded for the same period last year due to lower milled tonnage and grade of mined ore.
Bongani Ndlovu