MTHANDAZO NYONI BINDURA Nickel Corporation (BNC) is in the process of acquiring new underground mining mobile equipment to replace old technologies that have been pushing up operating costs, the firm said in an update to shareholders for the second quarter ended June 30 2022.
BNC, which is part of the Kuvimba Mining House, said the high cost of maintaining the aged underground equipment, coupled with the lower nickel in concentrate production resulted in an increase in unit costs.
“The cash cost per tonne for the quarter was 58% up on the cost for the same period in the prior year, while the all-in-sustaining cost per tonne increased by 55%,” BNC company secretary Conrad Fungai Mukanganga said.
“As a result of the disproportionately high operating costs, the company incurred a loss for the quarter. The acquisition of new underground mining mobile equipment to replace the old and unreliable units is under way.
“In addition, while awaiting delivery of new equipment, the company is complementing the current fleet by hiring equipment from different service providers. Both the new and hired mobile equipment is expected to increase the availability of equipment and ultimately increase production,” Mukanganga said.
The Victoria Falls Stock Exchange-listed firm said tonnes of ore mined for the quarter increased by 13% in comparison to production for the same period in the previous year mainly due to the delayed commissioning of the re-deep project attributable to unforeseen technical challenges.
“Ore head grade was 28% lower than the grade achieved in the same period last year, due to the declining massives strike length, which led to a reduction in the volume of massives, coupled with constraints on the rate of development due to underground mining mobile equipment challenges,” he said.
Tonnes of ore milled increased by 16% in comparison to the corresponding period last year. This marks the transition to the low-grade high volume mining strategy which has been occasioned by declining massive volumes, he said.
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Nickel in concentrate produced was 24% lower than for the same period last year, reflecting the lower grade of ore processed.
Mukanganga said the average London Metal Exchange (LME) nickel price of US$29 029 per tonne was 67% higher than the price of US$17 343 per tonne, which was achieved in the comparative period in the previous year. The price improvement was attributable to the global high demand for nickel.
He said nickel in concentrate sales for the period was 14% lower than for the same period last year.
“The sales decreased due to a delay in the renewal of the off-take agreement, which expired in early March 2022. A new two-year contract was signed in early April 2022 and export shipments resumed in the following month,” Mukanganga said.
He said the LME average nickel prices are expected to strengthen due to optimism surrounding the easing of lockdowns in China and an anticipated resultant improvement in economic activity, as well as the increasing demand for battery grade nickel in electric vehicles.
Nickel prices are, therefore, expected to be bullish for the remainder of calendar year 2022, he said.