By Mining Reporter – Friday 2 August 2019
HARARE (Mining Index) – DESPITE Bindura Nickel Corporation (BNC) sitting on over 400 000 tonnes of nickel reserves, the company still has to tie some loose ends to achieve greater output from its four mines.
BNC recorded lower nickel production output, depleted nickel concentrate, declining head grade, a fall in its non-current liabilities, a drop in current assets and a decline in gross profit among other factors.
Trojan Mine is currently sitting on 71 000 tonnes, Shangani Mine 65 000 tonnes, Hunters Road 200 000 tonnes while the new Damba Silwane exploration opportunity has estimated reserves of 67 000 tonnes of nickel deposits.
Shangani was put on care and maintenance, Hunter’s Road is at pre-development stage while the Damba Silwane is still an exploration venture. With Trojan Mine being the only operational mine, nickel production was 5.3 percent lower from the previous year’s output.
The downward trend was similarly recorded in the half year ended 30 September 2018 where nickel production at Trojan went down 11 percent year on year to 3.076 tonnes.
BNC Chief Executive Officer (CEO) Batirai Mandando admitted his organisation has not been spared by power cuts which are currently affecting both domestic and commercial entities.
He added that BNC requires 10MW of electricity per day, and BNC has been sourcing some of its power requirements from the local power utility, leaving the nickel producer with no option but to import electricity direct from Cabora Bassa in Mozambique.
The smelter project remains at 83 percent completion whose conclusion depends on funding and firming nickel price.
Initially, BNC had forecasted nickel prices at US$19 996 in 2015, US$21 000 for 2016, US$20 918 in 2017 while US$18 132 for 2018 and beyond.
“As reported before, the board is of the view that as long as the nickel market fundamentals have not driven the price to significantly higher levels, it will not make economic sense to continue injecting more capital into this project (the Smelter Project).”
“Discussions with various interested parties on the Smelter are still on-going, details of which will be disclosed at the appropriate time.”
BNC chairman Muchadeyi Masunda revealed that nickel production was 6289 tonnes which was lower than last year’s output of 6 620 tonnes. The decline was attributed to lower ore grade achieved year on year.
For year ending 2017, nickel tonnes milled were similarly down from 440 600 tonnes relative to 390 200 in 2018.
BNC nickel concentrate sold was 60 tonnes lower to 6410 tonnes from 6470 tonnes sold in the comparative period last year.
Head grade for year ended 31 March 2019 was 13 percent lower.
Comparatively, half year results for year ended 30 September 2018 revealed that head grade decreased to 1.70 percent from 2.19 percent in 2017.
BNC realised a fall in its non-current liabilities, dropping 31 percent from US$19.2 million owing to a decrease in interest bearing loans and borrowings.
Current assets were 21 percent lower from US$28.1 million recorded the previous year to US$22.1 million mainly dragged by a decrease in cash and short term deposits.
Gross profit was also 30 percent down due to the rise in cost of sales.
Notwithstanding the negative factors, BNC realised a net profit of US$13.5 million for the year ended March 31, 2019 up from US$5,8 million recorded in the prior year translating into a 15.6 percent improvement.
“In line with the increase in global nickel prices the company realised an average price of its nickel in concentrate sold of US$8 376 per tonne compared to US$7 249 per tonne in the relative period last year.” ENDS