Failure by Bindura Nickel Corporation (BNC) to secure funding for operations has resulted in the company recording a loss of $5,8 million for the half-year ended September 30 2011.
BNC, a subsidiary of Mwana Africa Limited, was put under care and maintenance in 2008 at the height of the country’s economic meltdown.
In a statement accompanying its financial results, company chairman Kalaa Mpinga said as of September 30 the year the group held $0,1 million.
He said costs on care and maintenance had been funded from working capital and by the referral of significant amounts, which remain due on demand to creditors.
“The group continues to seek funding for start operations. The directors believe the prospect of raising restart funding (debt or equity) will be significantly improved on the satisfactory conclusions to the current retrenchment proceeding and continued support by creditors,” said Mpinga.
He said directors had taken into consideration enhanced business environment in the country, improved regulations covering the export and payment for metals, relaxation of foreign exchange controls and the adoption of the multicurrency system.
“The directors consider that the requirement to raise new finance, together with the political and economic situation in Zimbabwe, in particular in recent developments relating to indigenisation legislation, represents a material uncertainty that may cast significant doubt as to the group’s ability to continue as a going concern,” he said.
“Nevertheless, the directors have a reasonable expectation that the group has adequate resources and initiatives in progress to secure funding to continue in operational existence for the foreseeable future.”
Last year, the company engaged SRK Consulting UK Limited to prepare a competent person’s report in respect of the technical economic viability of the recommencement of mining and concentrating operations.
“Based on their existing extensive and detailed knowledge of the mine, supported by the report of SRK Consulting UK Limited, the directors are confident that operations at Trojan Mine can be restarted and operated successfully, subject to the availability of finance,” he said.
“Securing financing for Bindura remains a challenge in the current political climate and with uncertainty prevailing over Zimbabwe government’s indigenisation proposals.
Nevertheless we are progressing with negotiations for loan finance and for restructuring of creditor and workforce liabilities which I believe will put us in a better position to restart operations,” Mwana Africa’s chairman, Oliver Baring, said in the group’s annual report 2011.