[miningmx.com] – UK-listed Mwana Africa is to restart nickel production from its 73%-owned Bindura Nickel Corp., a 12-month operation that will cost $26.5m to complete of which half will be debt-financed.
The balance of the funds will be sourced from available cash resources and cash flows generated by Bindura Nickel, said the Mwana Africa CEO Kalaa Mpinga. Mpinga told Bloomberg News in February that the restart would be entirely debt financed.
The decision to restart the smelter followed a study by Hatch Goba which modelled total concentrate throughput of 160,000 tonnes a year (tpa) of which about 54ktpa would be sourced from third party suppliers.
The smelter would be primarily supplied from Mwana Africa’s Trojan mine which consultants SRK found in October last year had a 10-year life of mine at a rate of between 63kt to 77kt a month.
“We can grow our revenue stream by moving rapidly up the value chain from current production and sale of concentrate, with the associated transportation saving cost of this, to production and sale of higher value nickel leach alloy,” said Mpinga.
Production would begin in the second half of the 2015 calendar year with the operation expected to generate cash flows in 2016. The decision to reopen the smelter comes as a ban on Indonesian exports in January sent the nickel price northwards.
Although Indonesia is planning new investment in nickel smelters, this will take time to come to fruition and will be expensive. Said Paul Gait, an analyst for Sanford C. Bernstein in a report dated May 12: “Either way, we see normalisation of the nickel price at levels substantially above those seen in 2013 as inevitable”.
The restart of the nickel facilities is a result of a strategic review by Mwana Africa – one which hasn’t been plain sailing.
Last year the company hired mining veteran Mark Wellesley-Wood to assist on breathing new life into the company’s direction only for Wellesley-Wood to leave the company in February.
At the time, Mpinga said there had been a difference of opinion with Wellesley-Wood, but that it did not involve any fallout with a shareholder. “We just found ourselves at odds,’ he said.
In addition to Bindura Nickel, Mwana Africa operates the 65,000 ounce a year Freda Rebecca gold mine in Zimbabwe, and has exploration properties in the Democratic Republic of Congo.
Mpinga told Bloomberg News on February 12 it was also considering re-fitting its base metal refinery in Zimbabwe to accommodate platinum group metal refining.
