Nickel producer faces closure

Nickel, producer, faces, closure, BNC, africa, zimbabweZimbabwe’s largest nickel producer, Bindura Nickel Corporation,  says "uncertainty" over the country's indigenisation laws have cast doubt over the group's capability to continue operations

In its financial statement for the interim period ending September 30, 2011 the group said the requirement to raise new finance also presented material uncertainty as a going concern.

BNC is seeking funding through debt or equity to start operations. Mwana Africa, which owns 52,9 percent in BNC, could be considering to dilute its shareholding to equity finance.

"The directors consider the requirements to raise new finance, together with the political and economic situation in Zimbabwe, in
particular - the recent developments relating to indigenisation - represents a material uncertainty that may cast significant doubt as to the group's ability to continue as a going concern," said the group.

"Nevertheless, the directors have reasonable expectation that the group has adequate resources and initiatives in progress to secure funding to continue in operational existence for the foreseeable future."

Government recently rejected the indigenisation plan of its local gold unit, Freda Rebecca, and advised it to amend and submit a proposal in line with the empowerment laws.

BNC is considering debt or equity to raise funds to restart, after the mine was put under care and maintenance for three years.

The mining company said the directors believe that creditors will significantly improve the prospect of raising restart funding on the satisfactory conclusion to the current retrenchment proceedings and continued support.

In its half-year to September 2010 results, the group had announced that BNC required new funding by the end of the first quarter of 2011 to continue its care and maintenance programme as well as restart Trojan Mine.

However, BNC managed to secure a US$10 million convertible loan from Mwana Africa as it was unable to bear the burden of extended care and maintenance that has taken more than three years.

The ZSE-listed company has three nickel operations - Trojan Mine which requires an estimated US$26 million to resume operations - Shangani Mine and Bindura Smelter and Refinery.

Following the release of the SRK report, which found the business plan for the restart of operations at Trojan both realistic and achievable, the company has continued to miss funding deadlines.

"Directors are confident that operations at Trojan Mine can be restarted and operated successfully, subject to the availability of
funding," said BNC.

During the period under review, the group reported a US$5,8 million loss. While on care and maintenance, the group's costs have been funded from its working capital and the deferment of significant amounts, which remain due on demand to creditors.

Barnabas Thondhlana

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