BNC mulls rights issue to restart Trojan mine

BNC MD David Murangari confirmed his company was mulling a rights issue but would not be drawn to give figures, saying plans were still at a tentative stage.

BNC’s key asset –– Trojan Nickel mine –– has been under “care and maintenance” since 2008. Although it remained unclear how much BNC needed to raise for Trojan, a report compiled by SRK Consulting of UK concluded that BNC required US$26 million to restart operations.

The firm suspended production in 2008 at the height of Zimbabwe’s economic crisis, and put the mine under “care and maintenance”. Its fortunes were also affected by a plunge in global metal prices.

Efforts to raise offshore funding by Mwana had been tumultuous after Zimbabwe announced indigenisation plans compelling foreign-owned mining companies with a net asset value of a US$1 dollar to dispose of a controlling stake to indigenous Zimbabweans.

Mwana Africa this month said it would commence a share sale to raise US$35million in a bid to fund the re-start of Trojan Nickel mine.

The company said China International Mining Group Corporation (CIMGC) would buy US$21,2million of new shares at 5,5 pence per share, while institutional investors would buy the remaining shares through a private placement. Mwana is listed on the London Alternative Investments  market.

The share sale may also re-start Mwana’s Zani Kodo gold project, in which it has an 80% joint-venture interest, and its 100% owned Semkhat copper-gold project located in the Democratic Republic of Congo.

Mwana Africa CEO Kalaa Mpinga said, “I am delighted to welcome CIMGC’s substantial investment into Mwana Africa, which, allied with the additional money we are looking to raise today, should enable us to re-start our nickel mine in Zimbabwe, and to fund our Zani Kodo and SEMKHAT projects respectively in the DRC.”

“Furthermore, we will be able to leverage CIMGC’s extensive contacts in China and interests in the DRC to the mutual benefit of both companies. This is a transformational transaction for Mwana and I am excited about the Company’s prospects as we continue our journey,” he added.

The Zani Kodo gold project will receive about US$12million for exploration activities and a pre-feasibility study, while US$6m is expected to fund Semkhat’s exploration activities and a scoping study for a 10 000 tonnes –per- annum copper operation on the Kibolwe prospect.

The BNC Smelter at Trojan mine can treat 1,1 million tonnes of nickel a year.

Bindura Nickel Corporation (BNC) recorded a US$5,8 million loss for the half year to September 30 2011. The company had an operating loss of US$6,2 million and a turnover of US$307 702.

The company attributed its financial position to the placement of its mining operations under care and maintenance.

BNC said its working capital was currently funding the cost of maintaining the mining operation.

The AIM-listed company  owns 52,9% shareholding in BNC.

BNC’s shareholders last year approved a US$10 million convertible loan from Mwana Africa to finance the care and maintenance exercise at Trojan.

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