Mining

BNC Bets On New Shareholders

LIVINGSTONE MARUFU

Listed mining concern, Bindura Nickel Corporation (BNC), is banking on new shareholders to complete all current projects and turn around the company’s fortunes.

The development comes after Asa Resources concluded the sale of its controlling interest in BNC in October last year to a local based mining concerned linked to business mogul Kudakwashe Tagwireyi.

BNC chief executive, Batirai Manhando, told Business Times that the company is finalising regulatory procedures with a local mining firm and will only announce new shareholders after the conclusion of the deal.

“We are banking on our new shareholders to complete all pending projects with the smelter project being the first priority. We are confident that the new shareholding structure will take the company forward and improve balance sheet,” Manhando said.

The nickel miner believes new projects of Shangani and Damba Silwane in the southern part of the country will also be fast-tracked under the new leadership.

BNC posted a 158% profit increase during the 2020 half year period to US$9,3m from US $3,6m during the comparative period in 2019 due to revaluation of foreign denominated loans and payables and decrease in costs.

During the half year 2020 presentation, Manhando said the company was banking on firming nickel prices and the completion of smelter in 2020 financial year. Revenue for the period increased by 8.4 percent to US$28,4m from

US$26’4m due to volumes growth as well as sustained price recovery. Total assets jumped 8% to US$108,2m from US$99,3m. Retained earnings were up 24% to US$33,8m from US $27,2m due to profit for the period.

Manhando said most of the components required for the projects had already been purchased and only required fittings. Nickel is used in major industrial processes. Most nickel production is used for alloying elements, coatings, batteries, and some other uses, such as kitchen wares, mobile phones, medical equipment, transport, buildings, power generation and jewellery.

The electric car revolution is set to transform the nickel mining companies since the product is a major component of hybrid car batteries. BNC said the buyer of Asa’s controlling 74.13% stake is “a Zimbabwean based mining entity with interests in the mining and production of ferrous metals, non-ferrous metals and precious metals”.

Landela Mining Venture, another subsidiary of Sotic International, recently emerged as the local joint venture partner in Great Dyke Investment, the Russia-Zimbabwe platinum project being developed near Darwendale.

The new owner of BNC is making the buy at a good time for nickel prices, but also a time the company needs a large injection of capital to ramp up production and take advantage. Nickel prices rose to US$18,850 per tonne in September after Indonesia, the world’s largest producer of the metal, announced it would ban ore exports.

BNC’s buyer will need to invest additional capex into the business, if it is to increase output. The company is seeking an amount of between US$7m and US$10m to complete smelter project which is at around 83% complete.

Since the project began in 2015, nickel prices have averaged US$12,000 per tonne, according to the company’s last earnings report. For the smelter to make sense, BNC has said it needs a nickel price of US$16,200 per tonne.

While prices are expected to ease – some believe the metal is now overpriced – nickel is already above BNC’s forecasts of US$12,000 per tonne this year, US$13,000 per tonne up to March 2020, and US$16,625 per tonne by March 2021.

According to BNC chairman Muchadeyi Masunda, the company needs at least US$500m of capex to raise production but Zimbabwe’s poor credit score and isolation means the company cannot access that money from global markets.

In 2017, Asa had planned to incorporate the Trojan mine into the Bindura complex, but missed its deadlines due to weak nickel prices and rising costs. BNC was founded in 1966.

In 2004, Mwana Africa, owned by businessman Kalaa Mpinga, acquired 53% of the asset from Anglo American Corporation for US$8m. Mpinga, however, lost control of the company in 2015, after a hostile takeover by China International Mining Group Corporation, an Asa associate, which had invested US$21m in 2012 to rescue Trojan Mine.

Asa gained control of 74.3% in BNC and 85% in Freda Rebecca gold mine. But claims of fraud and externalisation soon crippled Asa. In 2017, warrants of arrest were issued on chief executive Yat Hoi Ning and financial director Yim Kwan over allegations that they had illegally shipped out ore and stolen US$4,3m from the company.

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