THE Victoria Falls Stock Exchange (VFEX) has suspended trading in miner, Bindura Nickel Corporation Limited (BNC), shares after a reconstruction order was issued against its subsidiary, Trojan Nickel Mine Limited (TNML).
Justice, Legal and Parliamentary Affairs minister Ziyambi Ziyambi issued the reconstruction order in terms of section 4 of the Reconstruction of State-Indebted Insolvent Companies Act last week.
A reconstruction order is issued if a state-indebted company cannot repay a credit made from public funds on time due to fraud, mismanagement, or other factors, or if the state is liable to make payments under a guarantee issued to the company.
The minister may also issue the reconstruction order if a state-indebted company cannot become a successful concern, or if this measure is likely to improve its ability to pay debts and meet obligations.
Over the last two years, BNC has been struggling to guarantee its liquidity in order to continue operations owing to declining global nickel prices, export surrender requirements, and increased inflation-induced expenses.
The VFEX said trading in BNC shares was suspended with effect from Friday.
“This follows a notice of reconstruction, which has been issued in the Government Gazette General Notice 523A of 2024 issued on 2nd of May 2024,” the bourse said in a statement.
“The reconstruction order is in relation to Trojan Nickel Mine Limited, which is the major asset owned by Bindura Nickel Corporation Limited.”
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BNC is a state entity where Kuvimba Mining House has 71,74% shareholding. Kuvimba is wholly owned by the Mutapa Investment Fund.
“The VFEX has engaged and agreed with BIND.VX that the latter will make an application for voluntary suspension of trading of its securities on VFEX.
“Following the implementation of the halt, investors will not be able to buy or sell Bindura Nickel Corporation Limited’s shares during the period the halt is in effect.”
In its last trading update issued in February, BNC noted that to achieve long-term sustainability, the business needed to implement strategic initiatives focused on full recovery and operational efficiency.
At the end of its half year ended September 30, 2023, BNC was left with just 48 US cents to every dollar of short-term debt.
BNC also noted several challenges affecting the business.
“Currently, the company is faced with several challenges that threaten the survival of the business and the restart of the mine following the replacement of the SVR bull gear,” BNC said at the time.
“These challenges include, but not limited to the following: 1. low nickel price on international markets; 2. High domestic input costs, particularly electrical power costs, which have increased by more than 60% over the last 16 months; and 3. The need for capital to refurbish underground mining mobile equipment and the concentrator plant, and development of the mine which has been lagging for the past two decades.”
BNC said it recognised the need to acquire the required investment capital and for a sustainable electrical power tariff, considering the overall low resource grade and the prevailing depressed nickel prices on global markets.
“Efforts are ongoing with respect to these critical issues that have a huge bearing on the viability of the business,” BNC said.
“The company is cautiously optimistic that the success of these ongoing efforts will lead it onto a path of sustained gradual restart of the mine from the ongoing shutdown that started on 22 September 2023.”
