BUSINESS REPORTER
Listed miner, Bindura Nickel Corporation (BNC) recorded a subdued performance during the nine months to December 31 2023 following the decline in high-grade resource footprint and the low international commodity prices.
The company’s poor performance was exacerbated by the prevailing economic headwinds and the depletion of high grade ore.
In a trading update, BNC finance director Believe Dirorimwe said the deterioration of the SubVertical Rock Winder (SVR) bull gears, one of the company’s major pieces of fixed mining equipment, resulted in the hoisting capacity of the SVR declining to just 25% of its installed capacity by September 2023.
“Tonnes ore mined, at 177,179, decreased by 37% in comparison to 281,560 tonnes achieved for the same period last year. Run-of-mine ore was low due to the deterioration of the SVR bull gear, as explained above. In line with the decrease in the tonnes of ore mined, the tonnes ore milled, at 163,674, decreased by 42% from 281,135 tonnes recorded in a similar period last year.
“Head grade, at 1.10%, declined by 19% from the 1.35% attained in the comparable period last year due to the down dip reduction in the footprint of the high-grade resource. Nickel in concentrates produced, at 1,314 tonnes, was 40% lower than 2,192 tonnes recorded for the same period last year due to lower milled tonnage and grade of mined ore,” Dirorimwe said.
During the period under review, the average London Metal Exchange (LME) nickel price, at US$19,338 per tonne, decreased by 24% compared to the previous year’s price of US$25,477 per tonne, reflecting the global decrease in the demand for Nickel.
Dirorimwe said the price fell 31% to U$16,389 per tonne at the end of the third quarter of FY2024 from US$23,757 per tonne at the start of FY2024.
“Price at the beginning of FY2023 [US$33,298 per tonne] was higher than that at the beginning of FY2024 as the market was adjusting to fundamentals after the short squeeze rally of March 2022 which saw the price rise above US$100,000 per tonne,” he said.
Also, nickel in concentrates sales for the period, at 1,416 tonnes, were 40% lower than 2,353 tonnes sold during the same period last year.
Dirorimwe said the sales decreased in line with the decline in production and this resulted in a significant loss for the nine months period.
“The company’s overall performance, during the nine months and third quarter ended December 31 2023, was affected by the challenging operating environment and the deterioration of the SVR bull gear, after the previously reported initial damage that occurred in September 2022.
“The deteriorating SVR bull gear subsequently resulted in the hoisting capacity of the SVR declining to just 25% of its installed capacity by September 2023. 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 22 September 2023.
“The project was initially scheduled for completion by October 31 2023. However, the project faced unforeseen technical challenges that extended its completion date to the end of February 2024,” he said.
Dirorimwe said as a result of the shutdown referred to above, no ore was mined or milled, and no nickel in concentrates were produced during the third quarter.
In the comparable period, the company mined 51,770 tonnes of ore, milled 50,907 tonnes of ore, and produced 275 tonnes of nickel in concentrate.
The company did not incur unit costs during the third quarter at the back of the temporary shutdown necessitated by the project, however, the company recorded C1 costs of US$45,262 per tonne, C2 costs of US$50,366 per tonne, and C3 costs of US$52,348 per tonne in the comparative period last year.
In the outlook, analysts expect nickel prices to remain subdued in the last quarter and to settle at an average of US$17,000 per tonne during the calendar year 2024 due to the surplus in the metal market coupled with weak demand.
