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Bindura-Nickel-Mine

Business Reporter—

BINDURA Nickel Corporation has rolled over, to early next year, the payment of the principal component of its $20 million bond issued to finance restart of the Trojan Mine smelter.The integrated nickel smelting and refinery company said payment of principal was pushed back due to cash challenges stemming from low prices of nickel on global markets.

According to BNC, prices of nickel averaged $9 541 in the first half of 2016 compared to $11 787 the prior year. Payments were planned over a five-year period assuming average nickel prices of $19 300 per tonne.

Managing director Batirai Manhando, however, said the company was up to date with regards payment of interest obligations on the $20 million Trojan Mine smelter restart bond.

Mr Manhando recently said construction of the smelter was 71 percent complete with about 19,5 million having been spent thus far. The project is expected to cost $26,5 million.

BNC had indicated earlier that the balance required to cover the total project cost of $26,5 million — following the $20 million bond issue — would be met from internally generated funds.

“We have rolled over payment of the principal amount to next year due to cash problems, but in terms of the interest payments we are up to date,” Mr Manhando said.

According to terms and conditions of the Trojan smelter restart bond, the payment of the principal amount was subject to an 18 months moratorium from date of issuing the bond.

Payment of the principal bond amount was to be made through eight equal payments of $2,5 million each at the dates specified as per proposed repayment schedule.

The funds would be repaid into a sinking fund capitalised to the required extent by proceeds from the sale of nickel. The sinking fund was to be established, regulated and securitised in terms of the bond trust deed, managed by an independent trustee.

Contributions to the sinking fund commenced after the 18-month moratorium period.

The Trojan Mine smelter restart bond has a coupon rate of 10 percent per annum, payable semi-annually in arrears. The bond was guaranteed by ASA, the parent firm of BNC.

The bond was accorded prescribed asset status by the Ministry of Finance and could be recorded as such in the books of subscribers in terms of Section 26 of the Insurance Act (Chap: 24:07) and Section 18 of the Pension and Provident Funds Act (Chap 24:09).

Further, the smelter restart bond was also accorded liquid asset status by the Reserve Bank of Zimbabwe and could be recorded as such in the books of the holders.

BNC indicated earlier that the rationale for the smelter was higher pay ability of nickel in leach alloy than in concentrate and increases revenue for each tonne of nickel by 15-20 percent.

The company also said nickel leach alloy free from impurities, magnesium oxide in concentrate attracts price penalties but arsenic penalties offset this benefit and is less bulky.

Expectations are also that the smelter restart will cut transport costs with accelerated restart creating more than 300 jobs and generating additional tax revenue for the company.

The smelting of nickel will also mitigate any losses that would accrue from a ban on raw nickel exports and/or additional royalties that may be levied by Government in the future while the further nickel processing aligns with Government’s beneficiation drive.