BINDURA Nickel Corporation will convert US$3 million worth of liabilities into equity after shareholders approved the placing of 100 million ordinary shares of the Zimbabwe Stock Exchange-listed firm to selected creditors of the company.
The decision was taken as part of five resolutions tabled for consideration during the company’s annual general meeting held on September 19 in Harare which were all passed.
BNC shareholders endorsed the placement of 100 million ordinary shares of the company to selected creditors at a subscription price of US$0,03 per share, in lieu of amounts owed to them.
The share placement was undertaken in terms of permission granted at an Extraordinary General Meeting of the company, held on June 29 2012, where shareholders voted in favour of placing all unissued ordinary shares of the company under the control of directors for an indefinite period.
The shares in question were to be issued in compliance with the terms of the company’s Memorandum and Articles of Association and the ZSE listing requirements
“Due to the continued need to conserve the limited cash resources of the company, directors hereby propose the conversion of certain liabilities amounting in total to US$3 000 000 (three million United States of America dollars) into equity,” said BNC chairman Kala Mpinga.
BNC resorted to convert the shareholding into equity to avoid committing much needed resources to clearing debt at a time the firm needs them for phase two of the restart of its Trojan Mine.
The firm had earlier wanted to raise about US$39 million for the two phases of the restart of BNC but only managed to raise US$23 million in 2012.
After the failure to raise US$16 million for the second phase of the Trojan restart, management devised a strategy to survive in the short to medium term and this involved early extraction of massive totalling 6 290 tonnes nickel over a period of 18 months from July 2013.
The overall effect of this strategy on the Trojan life of mine is a timing issue only, but the total depleted nickel remains the same. This plan resulted in the significant reduction in the funding gap from US$16 million to only US$4,5 million, which is the short-term bridging finance it now requires.
Mr Mpinga said after the board’s approval of this revised plan on July 4, 2013, the BNC management team immediately started implementing the strategy and significant progress has been made in the ramping up of production and cost management at Trojan Mine.
The firm said safety performance has improved to date as a result of focus on key BNC programmes. Mining production performance was affected in the main by underground equipment availability but will improve as a result of the refurbishment programme starting in September 2013.
“Nickel in concentrate production is steadily increasing. A record high production in the history of Trojan mine of 714 tonnes nickel in concentrate, was achieved in the month of August,” said Mr Mpinga.