Bindura Nickel Corp raises red flag

Published: 01 August 2013

BINDURA Nickel Corporation warned of potential material uncertainty on its status as a going concern if it fails to obtain short-term bridging finance and execute a revised mining plan.

Africa's only integrated nickel miner said the future of the company as a going concern depended on successful implementation of the revised production plan and being able to raise US$4,5 million required for phase two of the restart of Trojan Mine.

BNC resolved to mine high grade ore massives, it would have exploited later in the mine's life, in conjunction with the current mining plan to generate additional revenue.

The new mining plan would make the company self-sufficient in generating funding to support operations over the next six months without support from the shareholders.

"The plan requires short-term bridging finance of approximately US$4,5 million. Such funding is required to settle current creditors and will be repaid in the short-term.

"The future funding of the group's operations is therefore dependent on the successful execution of the revised production plan and conclusion of the negotiations in respect of the bridging finance required," BNC said in its full year results.

BNC contends that failure to mobilise the requisite short-term bridging finance as well as failure to implement the revised production plan would make it difficult for the group to realise its assets and discharge its liabilities in the normal course of business.

"Should the corporation fail to execute the revised production plan, a material uncertainty exists, which may cast significant doubt as to the ability of the corporation and its subsidiaries to continue as a going concern," BNC said.

However, BNC said it is well positioned operationally. The company added that it engaged SRK Consulting of UK in January to complete a competent person's report on Trojan, which concluded that the restart plans were achievable and realistic.

But the nickel mining giant pointed out that the success of its business plans depended heavily on its ability to raise sufficient funding in the current financial year.

BNC has found itself facing serious challenges in funding the second phase of the restart of Trojan Mine have successfully raised US$23 million for restart of the mine.

As part of restructuring the group to suit the prevailing economic environment and to ensure viability the company subsequently made 1 000 jobs redundant. BNC also started refurbishment of the milling section, which was concluded in February this year.

Analysts Invictus Securities said the situation reflects the tight liquidity conditions in the market and difficulties corporates are facing in raising funding to support production.

"In the absence of an external injection of cash in the company, we believe that conditions are likely to remain difficult for Bindura until such a time that liquidity in the market improves," Invictus said.
- herald