ZIMBABWE Stock Exchange listed nickel mining firm, Bindura Nickel Corporation (BNC’s) smelter restart project has stagnated at 83 percent completion due to funding constraints.
The nickel miner indicated that progress on the project was put on hold during the year due to capital constraints.
“The delay in completing the project was caused by constrained cash flows for financing the remaining work due to prevailing low nickel prices.
“While plans are still at hand to complete the project, the decision to restart production at the smelter will still depend on the nickel prices, availability of additional concentrates from third parties and a lower power tariff,” said Bindura chairman Muchadeyi Masunda.
In 2015, Bindura raised US$20 million through a bond issue to finance the restart of the smelter through a five year bond with a coupon rate of 10 percent per annum. A total of 26,5 million was required for the smelter restart project. BNC had planned to finance the balance after the US$20 million bond issue from internally generated resources.
Last year, indications were that the group had already the entire US$20 million raised through issuance of the bond, leaving the facility only 83 percent complete.
Over US$21 million been channeled towards the project by September 31, 2017.
The group was also negotiating with third parties to process their ore so as to fully utilise the smelter on completion. Ore from Trojan mine will not be enough to meet capacity of the smelter as it will be enough to utilise only 55 percent.
As such, the group will process ore from nickel concentrate supplied by third parties to utilise the excess 45 percent capacity of the Trojan Mine smelter, which will further enhance earnings.
Meanwhile, on other capital projects, Bindura said it had spent US$14,3 million towards the Trojan shaft re-deepening programme.
The project has a total approved capital expenditure of US$18,9 million. Trojan shaft re-deepening project will see deepening of the mine shaft to 46 level.
Mr Masunda said work currently in progress include installation of steelworks for the loading station and sub vertical rock winder mechanical and electrical control upgrades.
During the year under review, Shangani Mine remained under care and maintenance. Mr Masunda said the company’s cashflows were highly dependent on the nickel price.
For the greater part of the year, the London Metal Exchange nickel price were subdued before picking up in the last quarter to an average US$11 000 compared to US$10 000 in the prior year.
As at year end, the group’s net cash position was an overdraft of US$2,7 million and a fully utilized overdraft facility of $7 million.
Profit after tax jumped 857 percent to US$5,8 million while gross profit increased by 35 percent to US$18,8 million in line with the growth in revenue.
At US$53,6 million, revenue was 19 percent above last year’s US$45,1 million on increase in average nickel price realized in the year.