BNC woes continue: VFEX suspends trading of company’s shares

BINDURA Nickel Corporation (BNC) has voluntarily suspended trading of its shares at the Victoria Falls Stock Exchange Limited following the placement of its main operating subsidiary, Trojan Nickel Mine Limited, under a reconstruction order last week.

The suspension took effect yesterday, following a tumultuous week for the mining company, which was hit with the reconstruction order.

The reconstruction order, as outlined in Section 4 of the Reconstruction of State-Indebted Insolvent Companies Act (No. 27 of 2004), is published in the Government Gazette under General Notice 523A of 2024.

Justice, Legal and Parliamentary Affairs Minister, Ziyambi Ziyambi, appointed Ms Mutsa Mollie Jean Remba as the administrator.

Mr Ian Mtetwa is the assistant.

The mining company was listed on VFEX in 2021 ranking among the pioneers of the bourse. It is the first VFEX-listed firm to have its shares suspended on the exchange.

Under the Act, the relevant minister is empowered to issue a reconstruction order when there are indications of fraud or mismanagement, leading to doubts about a State-indebted company’s ability to repay any credit received from public funds.

Last Friday, BNC shares were suspended from trading on the stock exchange. VFEX subsequently announced that it has reached an agreement with Bindura Nickel Mine for the latter to request a voluntary suspension of trading of its securities on VFEX.

Victoria Falls stock exchange

In a notice yesterday, Head of VFEX Markets, Mr Robert Mubaiwa said: “The Victoria Falls Stock Exchange Limited hereby notifies the investing public of the voluntary suspension from trading in shares of Bindura Nickel Corporation Limited with effect from 6 May 2024 following the placement of its major operating subsidiary, Trojan Nickel Mine Limited, under a Reconstruction Order in terms of the Reconstruction of State-Indebted Insolvent Companies Act.”

The suspension is for the duration of the Administration period and it confers upon the administrator the power, subject to the rights of the creditors of the company, to raise money in any way without the authority of shareholders for the reconstruction of the company.

The Reconstruction Act has among other provisions, the following clause: “6 (d) every disposition of the property, including rights of action, of the company and every transfer of shares or alteration in the status of its members, made after the commencement of the reconstruction, shall, unless the administrator otherwise orders, be void.”

VFEX noted that although the reconstruction order was issued against Trojan Nickel Mine Limited, BNC as the holding company is equally affected with the order pursuant to Section 4 (3) (a) of the Reconstruction Act.

Added Mr Mubaiwa: “As a result, the Administrator has applied for the voluntary suspension in trading of BNC shares on the VFEX. The VFEX sought and was granted permission to suspend trading in Bindura Nickel Corporation Limited’s shares by the Securities and Exchange Commission of Zimbabwe pursuant to the provisions of Section 64 (a) (ii) of the Securities and Exchange Act [Cap 24:25].”

VFEX noted that in terms of Section 9 of the VFEX Listings Requirements, BNC should continue to discharge its obligation to the Shareholders and the VFEX during the suspension.

Last Thursday, the nickel company warned about the ongoing impact of low nickel prices, high input costs, especially electrical expenses, significant mining depth and low resource grade on its operations.

Despite completing the Sub-Vertical Rock (SVR) Project, leading to a temporary shutdown of BNC’s Trojan Nickel Mine (TNM) from September 22, 2023, the company said it still faces challenges expected to delay the resumption of mining activities at TNM.

Internationally, nickel prices on the London Metal Exchange have notably declined due to market surplus conditions caused by increased production in China and Indonesia, along with subdued global demand.

Zimbabwe Stock Exchange (ZSE)

VFEX has been said to offer several incentives and trading advantages compared to the Zimbabwe Stock Exchange (ZSE), which has been the pull factor for listings on the bourse.

The US dollar-denominated exchange provides extended options for capital raising, including debt listing in foreign currency.-chronicle