BNC warns shareholders, potential investors
LISTED nickel mining concern, Bindura Nickel Corporation (BNC) has warned its shareholders and potential investors that it projects a material decline in profitability for the rest of FY2024 due to the protracted shutdown, coupled with the low nickel prices prevailing on the global markets.
The decline in profitability may also have a material effect on the value of the company’s securities.
In a cautionary announcement and profit warning statement, managing director, Mr Thomas Lusiyano said based on a preliminary assessment of the consolidated financial results, the company is projected to record a loss after taxation during the six months ending 31 March 2024, which is eight percent higher than the loss recorded in the comparative period last year.
“Accordingly, shareholders and the investing public are advised to exercise caution and to consult their professional advisers when dealing in the company’s securities, until another announcement is made by the end of April 2024.”
Giving an update on the operating environment, Mr Lusiyano said the financial performance during the calendar year 2023, was attained against the background of a challenging operating environment, mainly due to the deterioration of the Sub-Vertical Rock Winder bull gear at Trojan Nickel Mine.
He said to address the deterioration problem, the entity procured a replacement SVR bull gear, similar in size and duty, and initiated the SVR Bull Gear Replacement Project necessitating a transient shutdown of TNM from September 22, 2023.
The SVR is one of the company’s major pieces of fixed mining equipment and is used to hoist ore from underground.
The deteriorating SVR bull gear subsequently resulted in the hoisting capacity of the SVR declining to just 25 percent of its installed capacity by September 2023.
“The Project was initially scheduled to be completed by 31 October 2023. However, the project faced unforeseen technical challenges that extended its completion date to the end of April 2024. Consequently, as of this announcement’s publication date, TNM has been on shutdown for six months.”
In a recent trading update for the nine months and third quarter ended 31 December 2023, BNC said in the period under review, no nickel in concentrates sales were recorded owing to the shutdown.
Nickel concentrates sales for the same period last year was 207 tonnes.
The lack of production resulted in a significant decline in financial performance and the firm incurred a loss for the quarter.
Based on the report, tonnes ore mined, at 177 179, decreased by 37 percent in comparison to 281 560 tonnes achieved for the same period last year.
Run-of-mine ore was low due to the deterioration of the SVR bull gear.
“In line with the decrease in the tonnes of ore mined, the tonnes ore milled, at 163 674, decreased by 42 percent from 281 135 tonnes recorded in a similar period last year. Head grade, at 1,10 percent, declined by 19 percent from the 1,35 percent attained in the comparable period last year due to the down dip reduction in the footprint of the high-grade resource.”
Globally, nickel prices on the London Metal Exchange experienced a significant decrease of 48 percent dropping from US$31 200 per tonne at the beginning of January to US$16 300 per tonne at the end of December 2023.
The slump in nickel prices can be attributed to market surplus conditions, which have arisen due to a surge in production from both China and Indonesia coinciding with subdued global demand.
China has been producing high-purity class 1 nickel, which is used in the production of nickel sulphate and nickel cathodes for Electric Vehicles (EVs).
On the other hand, Indonesia has been producing lower purity class 2 nickel (nickel pig iron and ferronickel), which is used in products such as steel.-chronicle
