LISTED mining company Bindura Nickel Corporation shareholders have approved the conversion of some of the mining group’s liabilities into equity in a move that will see the company placing shares translating to a 10% stake with selected creditors, a top company official said.
Report by Victoria Mtomba
Shareholders at an annual general meeting in the capital yesterday agreed that 100 million ordinary shares of the company be converted to equity at a subscription price of 0,03 cents per share in lieu of amounts owed to creditors.
The company currently has 1,2 billion shares on offer.
BNC chairperson Kalaa Mpinga told shareholders at the meeting the move would give the company flexibility in dealing with it.
“The creditors include a small chunk for employees, while the rest are creditors of the business. Some of the employees have indicated interest to take up shares in the company. We are encouraging the employees to take those shares as it will give us flexibility,” Mpinga said.
As for the year 2012, current liabilities for BNC stood at $23,6 million from $40,7 million owing largely to a rights issue and write back of amounts due to employees as part of a settlement plan.
Long term loans increased to $10,7 million due to a loan provided by the parent company Mwana Africa.
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Mpinga said the mining company was engaging local banks to access $4,5 million facility for the second phase of the Trojan Mine restart, adding that he saw a steady level of production by year end.
The company failed to raise funding for the second phase to restart Trojan Mine which resulted in it coming up with a short to medium-term plan.
He said the strategy involved the earlier extraction of massives totalling 6 290 tonnes nickel over a period of 18 months from July 2013.
Mpinga said the plan resulted in reduction in the funding gap to $4,5 million from $16 million.
“After the board approval of this revised plan on July 4, 2013, BNC management team immediately started implementing the strategy and significant progress has been made in the ramping up of production and cost management. From the commencement of production in March 2013, the plant has processed 253 329 tonnes of ore and produced 1 810 tonnes nickel in concentrate. A total of 1 642tNi has been sold to Glencore, ”he said.
“Discussions with local banks for the $4,5 million are underway. I would like to think in the next few weeks we will be able to make an announcement,” Mpinga said. He said during the month of August, the company had the highest production history at Trojan Mine of 714 tonnes of nickel in concentrate.
“The BNC recovery strategy is sound and has minimal risks and is already bearing fruit. Revenue generation has improved. The main threat to the plan remains the nickel price. While improving efficiencies, the focus on reduction of expenditure will improve the operating income.”
