Zimbabwe Stock Exchange-listed (ZSE) mining concern Bindura Nickel Corporation (BNC) has announced plans to float a $21 million rights offer in an effort to resume operations at Trojan Nickel Mine, as demand for the metal remains high on predominantly Asian markets.
The nickel miner posted an after-tax loss of $12,7 million for the full-year to March 2012 compared to a loss of $16,4 million recorded during the previous year.
BNC shareholders are expected to vote for or against the capital raising exercise at an extraordinary general meeting set for June 29.
Should shareholders approve this initiative, the rights offer is expected to close on July 27 2012.
In a circular to shareholders, BNC said funds raised from the rights issue would kick start operations at BNC which had been on “care and maintenance” since 2008.
The rights issue will be underwritten by Mwana Africa Plc, the nickel mine’s largest shareholder.
“Pursuant to the decision to restart operations, the board is proposing that the company raises, by way of a renounceable rights offer, an amount of approximately $21 000 000 for purposes of funding the resumption of production at the Company’s Trojan Nickel Mine and concentrator.
The rights offer is fully underwritten by ZimNick Limited, a wholly-owned subsidiary of Mwana Africa Plc,” reads a circular by the firm.
The firm announced that additional funding totalling $12 million in the form of debt finance is also required by the mine.
“The $21 million being raised from the rights offer will not be adequate to fund both the restart of operations as well as resolve legacy creditors. In light of this, the directors seek the authority to issue ordinary shares to selected creditors, through a private placement, in lieu of amounts owed. The Directors are of the view that this is the best available route to resolve the legacy creditors given that the cash raised under the rights offer is being applied towards the restart programme,” the company said.
BNC expressed confidence that debt funding would be secured for the second year of operations due to an anticipated growth in output.
The nickel miner also expected to pay part of the funds to its creditors and outstanding salaries for its workforce.
“In the event that the proposed transaction is not implemented, the company’s operations will remain on care and maintenance; the cash costs of which, at an average $950 000 per month, is not sustainable and may result in liquidation of the company; the company’s assets and equipment will be exposed to further deterioration thereby compromising their integrity and putting the company’s going concern status in doubt; the company will continue to lose valuable skills; and the company will not be able to take advantage of the improving global economic climate, which is positively impacting commodity prices,” the company said.
BNC is the only integrated nickel mine, smelter and refinery in Africa.
The nickel mining concern owns and operates Shangani Nickel Mine and Trojan Nickel Mine, as well as its own smelter and refinery situated in Bindura. The mines are currently on care and maintenance.