Trojan Nickel Mine gets new lease of life

the investment from the Chinese mining group will result in the resumption of operations at BNC, which was put on care and maintenance in 2008, after a sharp decline in global nickel prices and production problems.
Mwana Africa chief executive Mr Kalaa Mpinga yesterday described the investment, which will result in  the resumption of operations at BNC, as a “transformational transaction for Mwana”.
“I am delighted to welcome CIMGC’s substantial investment into Mwana Africa, which, allied with the additional money we are looking to raise today, should enable us to restart our nickel mine in Zimbabwe,” he said.
“Furthermore, we will be able to leverage CIMGC’s extensive contacts in China and interests in the DRC to the mutual benefit of both companies.
“This is a transformational transaction for Mwana and I am excited about the company’s prospects as we continue our journey.”
CIMGC invested in Mwana through a conditional subscription of new ordinary shares at a price of 5,5 pence per share, and the balance via a proposed placing of new ordinary shares with institutional investors at a price of 5,5p per share.
Mwana said the net proceeds from the subscription and placing will principally be used to fund the potential restart of Bindura Nickel Corporation’s Trojan Mine in Zimbabwe, and to fund the group’s activities at its Zani Kodo gold project and SEMKHAT copper-cobalt tenements in the Democratic Republic of Congo.
Earlier indications from Mwana had put restart of BNC operations to the tune of around US$26 million. It is thus unclear whether the CIMGC investment will be enough for resumption of BNC, in addition to funding for the DRC projects.
Mwana seems to have settled for equity funding for the BNC, which is one of the financing options the company was considering last year.
Mwana has since said that once financing had been secured, it expects BNC to restart mining at Trojan with an initial rate of 10 000tpm ramping up to                   70 000tpm over 12 months, and eventually 870 000 tonnes of ore, once steady state is achieved.
The company has concluded an offtake agreement with Glencore International AG that will see Glencore purchase all the concentrate produced by BNC.
In terms of that deal, BNC will sell all nickel concentrate produced at Trojan to Glencore until the Bindura smelter and refinery are restarted.
Glencore will pay BNC an London Metal Exchange-linked price on agreed terms for final contained nickel.