Bindura Nickel Corporation may consider floating a bond to raise funds
Golden Sibanda Senior Business Reporter
BINDURA Nickel Corporation might float a bond to raise an undisclosed amount of funds needed to finance the restart of its mothballed smelter at a cost of $26 million. The mining company is on record saying it would seek debt finance for half of the required amount and mobilise the balance from the nickel miner’s own resources.
To that end, Africa’s only integrated nickel miner said it has already signed seven term sheets with local financial institutions, as the fundraising gathers steam.
However, new details have emerged that while the fundraising was on course, the group was considering the possibility of floating a bond, apart from the option for a bank loan, to raise the requisite funds for the smelter.
Parent company, Mwana Africa Plc head of investor relations Ms Caroline Mathonsi said a decision would be made internally on whether to pursue a bank loan or the bond.
“The company is looking at all debt options. If we do a bond, it will be a straight bond; not convertible,” she said, adding, “We have seven term sheets from banks. Internally, we are going to decide what option to follow. It could be a bond; it could be a (bank) loan”.
BNC is a subsidiary of Alternative Investment Market listed Pan-African commodity group, Mwana Africa Plc.
Ms Mathonsi said the fundraising exercise was well on course. She said the efforts were predominantly focused on local institutions, but pointed out that consideration could also be given to regional financiers.
Asked about the possibility of securing funding on the domestic market given the tight liquidity situation, Ms Mathonsi said, “You would be surprised the funds are available locally.”
Executive chairman Mr Kalaa Mpinga told the firm’s annual general meeting in August this year that preparatory work for the restart of the smelter had commenced.
He said the project team had been recruited; key components of the engineering designs had been completed while orders for key technical components had been placed.
Site preparations and demolition of some of the infrastructure had also reached advanced stages, he said.
Mr Mpinga also said that the Pan-African mining group was seeking national project status for the smelter restart, expected to save BNC $12 million in transport costs annually.
National project status was also sought and obtained for the restart of Trojan Mine to allow for duty free import of equipment.
The smelter was mothballed in 2008 when other operations were put under care and maintenance at the height of economic instability in Zimbabwe and a plunge in global metal prices, which affected viability of business.
BNC has since returned to full production, helping Mwana Africa to achieve record revenue inflows of $65 million and bottom line of $26 million for the year to March.
This follows a successful capital raising exercise in 2012, during which $23 million equity funding was raised, setting the stage for remarkable turnaround journey.