MWANA Africa will require at least $26,5 million to restart its smelting plant at Bindura Nickel Corporation, the Pan African mining company announced yesterday.
Based on the independent study by Hatch Goba, Mwana Africa plans to restart the smelter in the first half of next year and will start contributing to the cash flows in F16.
"Approximately half of the capital cost will be funded through debt finance, with the remainder to be financed from existing BNC cash flow and company cash balances," said Mwana Africa.
The estimated operating cost of the smelter will be $251 per tonne of concentrate, according to the Hatch study, while the installed power for the furnace will be 14MW.
Nickel concentrate throughput will be approximately 160 000 tonnes per annum (and) Trojan Mine concentrate production is expected to be 106 677 WMT per annum "and therefore, there will be spare capacity on the smelter to treat third party material."
Mwana African owns 76,3 percent shareholding in BNC, a Zimbabwe Stock Exchange- listed firm.
The company said the study represents a technical and economic assessment of the potential refurbishment and restart plans of the smelter complex in Bindura Nickel Corp.
"The plans are confirmed to offer significant financial and strategic benefits to BNC," said Mwana.
Benefits will also be derived from the reduction in transport costs associated with selling concentrates and potential to increase revenue by producing and selling higher-value nickel leach alloy.
Further opportunities for the company exist beyond the smelter restart, including potential to increase volume through development of BNC's Hunters Road Mine Project at a later date, investment in adaptation of the smelter to treat platinum group metals (PGMs), contingent on securing PGM feedstock and to restart of BNC refinery, currently on care and maintenance, to treat nickel leach alloy and PGMs.
Mwana chief executive Mr Kalaa Mpinga said restarting of the smelter would pave way for the company to capitalise on the opportunity presented by a favourable nickel market.
Nickel prices are on a rebound from three consecutive years of decline. But since the beginning of year, the prices have increased by 47 percent, faster than any other base metal on the London Market Exchange. Indonesia, the biggest nickel ore miner, banned ore exports in January to boost domestic processing.
China depends on the ore for its low-grade nickel used in stainless steel and, with the ban disrupting supplies, its output may drop 25 percent this year, tipping the global market into deficit, said a Business Day report citing Macquarie, an international advisory firm.
"I am pleased to announce completion of the independent study of the accelerated smelter restart plan," said Mr Mpinga.
"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.
"This study outlines the costs and key milestones required to restart the smelter, and we look forward to updating the market on financing and development of the accelerated smelter restart plan as it evolves over the coming months."
- The Herald
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