Improved nickel prices boost BNC
RYAN CHIGOCHE
Bindura Nickel Corporation (BNC) has recorded an increase in revenue and performance in the half-year ended September 30 2021, fuelled by improved nickel prices and unexpected demand for nickel, Business Times can report
The increase in revenue comes despite a 13% drop in production compared to the same period last year.
Nickel in concentrate production for the half-year to September 30 2021 was 2,553 tonnes, 13% lower than 2,929 tonnes produced in the same period last year with the decline attributed mainly due to the head grade of 1.26%, which was 22% than the same period last year and the commissioning of the Shaft Re-deep and Tie-in project.
Nickel sales volume was 2,549 tonnes, a figure marginally lower than last year’s sales of 2,566 tonnes.
However, despite the marginal decline in sales volumes and the 13% plunge in nickel concentrate production, the average LME nickel price of US$18,234 per tonne was 38% higher than the previous year’s price of US$13,214 per tonne, reflecting the global increase in nickel prices.
Nickel prices rose to a seven-year high of $20,060 per tonne on September 17 2021,supported by unanticipated demand as Chinese stainless-steel producers ramped up production ahead of the government-sanctioned production cuts due to power rationing.
On the account of improved nickel prices, BNC, revenue increased by 41% to US$35.3m from US$25m although sales volume was in line with the volume sold in the comparative period last year.
In line with the increase in revenue, gross profit of US$10.9m was 35% higher than last year’s figure of US$8.1m, as profit from operating activities rose by 31% to US$6.2m, compared to US$4.7m recorded in the first half of last year.
Profit and total comprehensive income for the period were US$5.8m compared to US$3.4m for the same period last year, reflecting the positive impact of improved nickel prices.
In the period under review, the company continued with its ongoing programme to replace old and obsolete mobile mining equipment.
BNC reported a total capital expenditure of US$4.7m of which US$1.2m was spent on a new exploration drill rig, a Load, Haul and Dump (LHD) machine and also on major rebuilds of existing LHDs and rigs.
A total of US$1.1m was spent on Haulage and Ramp developments to provide operational access to deeper resources.
The company’s Sub-vertical Rock Winder was upgraded at a cost of US$448,000 while US$402,000 was spent on the refurbishment of the Concentrator Both in April 2021 during the Shaft, Re-deepening shut down.
In the outlook, the company’s board chairman Muchadeyi Masunda said BNC will ramp up nickel concentrate production setting a target of 6000t for the full year.
“Poor equipment availability combined with lower than expected massive grades in September and October 2021 resulted in nickel production for both months being lower than planned. The focus during the remainder of the year will, therefore, be on recovering the nickel in concentrate production deficit and managing costs. Nickel in concentrate production for the full year is thus still expected to be about 6,000 tonnes,” Masunda said.
On October 15 2021, the BNC board approved a proposal by management for the company to be delisted from the Zimbabwe Stock Exchange and to subsequently list on the Victoria Falls Stock Exchange (VFEX) as the company looks to tap into the various lucrative benefits presented by the bourse.
In terms of the Exchange Control regulations, 40% of the company’s export revenue is compulsorily surrendered to the Reserve Bank of Zimbabwe for the local currency converted at the auction rate.
The combination of the compulsory surrender of 40% of revenue and the discrepancy between the auction and parallel market rates resulted in an estimated loss to the company of US$1.2m for the six months.
BNC generates income in foreign currency; therefore listing on the VFEX will enable the company to retain 100% of its incremental export proceeds in foreign currency, which reduces exposure to the compulsory surrender requirements.
