Johannesburg – Mwana on Thursday announced that Bindura Nickel Corporation (BNC)‚ its 52.9% subsidiary‚ intends to carry out a rights issue to raise $21m.
The proceeds will be used to fund the restart of BNC’s Trojan Nickel Mine in Zimbabwe‚ and Mwana said it would underwrite the rights issue‚ through its Zimnick Limited subsidiary.
BNC shareholders will be asked to approve the rights issue on June 29. The rights issue is planned to close on July 27.
The company said the completion of the rights issue was conditional on the satisfactory resolution of legacy creditor‚ staff retrenchment and back-pay liabilities at BNC in a way that would make the restart of Trojan viable.
BNC‚ listed on the Zimbabwe Stock Exchange‚ owns the only integrated nickel mine‚ smelter and refinery operation in Africa.
It owns and operates the Trojan Nickel Mine‚ Shangani Nickel Mine and a smelter and refinery‚ all of which are currently on care and maintenance.
In addition to these assets BNC also owns the Hunters Road nickel project‚ in the Southern Greenstone belt of central Zimbabwe.
The BNC directors estimate the total costs of restarting the Trojan mine at $33m‚ with $21m taking the mine into production and revenue generation in the first year of the restart‚ and a further $12m for the following year taking BNC to a cash flow-positive position.
The proposed BNC rights issue will fund the first $21m of the funding requirements.
The BNC directors are confident they can secure the remaining funding requirements from alternative sources‚ including debt‚ and will be pursuing this following the rights issue.
“Economic and operating conditions in Zimbabwe have improved markedly over the past few years‚ and following the recent subscription by China International Mining Group Corporation into Mwana‚ the time is right to proceed with the phased restart of operations at BNC‚” Mwana CEO Kalaa Mpinga said.