adminmarks the conclusion of a recapitalisation and restructuring process for the company and sets the platform for the restart of its Trojan Nickel Mine based in Bindura.
This placement is the culmination of a difficult route the nickel miner has had to travel over the last few years. BNC’s operations were frozen in late 2008.
This was due to a combination of an increasingly difficult operating environment in Zimbabwe coupled with a global crash in the nickel price which plunged the business into a loss-making position and resulted in the build-up of large creditor and staff liabilities.
Following dollarisation and an improved operating environment in Zimbabwe together with a recovery in the nickel price on the global market, BNC management decided the time was right to restart operations at the mine.
The strategy is to restart operations in a phased manner beginning with the restart of Trojan Nickel Mine.
BNC, however, struggled to raise the required funding for the restart until June this year when its major shareholder, Mwana Africa, offered to underwrite a US$21 million rights issue to assist in recapitalising the group.
On June 17, BNC formally announced its intention to carry out a rights issue and on June 29, its shareholders approved the rights issue and placing.
A condition to the rights issue proceeding was that a satisfactory resolution be reached with creditors and staff on settling their liabilities.
While agreement was reached with creditors fairly early in the process, the negotiation with staff took longer and resulted in the rights issue closing date being postponed from July 27 to August 31.
An agreement was eventually reached with staff, which allowed the rights issue to proceed and the rights issue shares were listed for trading on September 10.
Part of the settlement solution with creditors and staff was that they could take shares in lieu of their liabilities and it is this placing of shares to creditors and staff which was concluded last week with the placing shares being listed for trading on the ZSE.
The rights issue shares and the placing shares were all issued at the same share price of US0,03c.
The rights issue and placing were structured in such a way that all shareholders, creditors and staff were offered a shareholding in BNC, but, were not forced to invest if they chose not to. Mwana Africa, through its subsidiary, Zimnick, invested US$21 million in BNC through this process. Other shareholders invested an additional US$2 million in new cash into BNC.
Creditors and staff in total converted a value of US$11,5 million liabilities to BNC shares.
Management said this investment had given BNC, communities surrounding the mine and businesses supplying the group, a new lease of life.
BNC chief operating officer Mr Batirai Manhando said the US$23 million raised via the rights issue was sufficient to fund the first year of the Trojan restart, adding the group would require additional funding for the second year of the restart.
“Being able to restart operations is a relief for everyone concerned. Management can now focus on restarting and running the Trojan mine. I am very bullish on the success we will achieve with this mine. A lot of pre-start work has already been done both underground and on the surface plant.
“This and the fact that the concentrator flotation plant is new has de-risked the restart of operations. I am confident the Trojan restart project will deliver good results,” he said.
After the restart of the mine, BNC is targeting an annual production of 7 000 tonnes of nickel in concentrate per year. It will take about three years to grow to this level of production. BNC has already entered in an offtake agreement with Glencore, who will purchase all the nickel concentrate produced by Trojan.
Online Reporter