BNC offers up to venture capitalists


Bindura Nickel Corporation (BNC) does not hope to open its closed mining, smelting and refining operations any time soon, admitting funding challenges have forced it to consider going into debt, which is proving difficult to secure at the moment.
If this option fails completely, the subsidiary of Mwana Africa will have to offer itself to venture capitalists and angel investors wishing to buy into Zimbabwe’s resources sector, ranked 8th in Africa in terms of investment opportunities, according to a board member.
BNC is seeking as much as $100 million to resume operations at Trojan Mine, Shangani Mine and Bindura Smelter and Refinery, which have been on care and maintenance since December 2008.
However, the company’s balance sheet is currently too weak to support debt commitments of that size, while the inconclusive issue of mining sector indigenisation has adversely stoked its risk profile, scaring off potential investors.
It is not yet clear how much equity BNC, the second most capitalised resource corporation on the Zimbabwe Stock Exchange, is prepared to offer to potential partners.
The three operations are scheduled come back on stream in phases, starting with Trojan Mine, the largest of the two mines.
“We are going to open the mines in phases, phase one being Trojan Mine, followed by Shangani Mine and then Bindura Smelter and Refinery,” the source said.
“The current focus for the business is to raise funding for phase one of the projects to start. The corporation is considering several financing options which include both debt and equity financing.”
Trojan Mine, Bindura Smelter and Refinery and Shangani Mine were put on care and maintenance in 2008 when hyperinflation eroded working capital, aggravating the global commodity slump which hit resources worldwide.
During the year, all but one gold mine in the country also closed down. The closure of the mines has affected national output of the precious metal used to make stainless steel and corrosion-resistant alloys.
Last year, nickel production slumped 24% to 4 837 metric tonnes from 6 354 metric tonnes in 2008 despite a global rally in the price of the precious metal during the year.
By December, nickel prices had risen 75% to $17 518 per metric tonne from around $10 000 per metric tonnes at the beginning of the year.