Bindura Nickel Corporation (Zimbabwe) revenue up 41% to US$35.3 million in HY2021

By Published On: December 2nd, 2021Categories: Corporate announcement, Earnings

Bindura Nickel Corporation Limited ( HY2022 Interim Report


The Zimbabwean economy is forecast to grow by between 5% and 7% in 2021, underpinned by a successful 2020/21 agricultural season and high commodity prices. However, the threat of a resurgence of COVID-19, persistent foreign currency shortages, the widening gap between the auction and unofficial exchange rates as well as the potential of an increase in the already high inflation rate, will pose serious threats to continued growth and economic stability.

The operating environment for the remainder of the current financial year is therefore expected to remain challenging.


Safety, Health, Environment and Quality (SHEQ)

COVID-19 Update
A total of fifty-eight (58) COVID-19 positive cases were recorded among the 1,039 employees during the six months to 30 September 2021, an increase of forty-four (44) positive cases over the same period last year. Trojan Mine Clinic was granted ‘Voluntary Vaccination Site’ status on 28 July 2021 and vaccinations have been carried out daily since then, aided by the supply of vaccines to the clinic under the Kuvimba Mining House Private Sector Initiative, for the voluntary vaccination of employees and their dependants.

As at 30 September 2021, 76.5% of the Company’s employees had been fully vaccinated against COVID-19. Since then, all employees have been fully vaccinated.

Safety performance in the first quarter was unsatisfactory with two (2) Lost Time Injuries (LTI’s) recorded during that period. Safety performance improved in the second quarter with no LTI’s recorded and thus, total LTI’s for the six months remained at two. Management remains focused on ensuring that the workplace is safe and positive employee behaviour is reinforced to eliminate injuries at work.

Nickel in concentrate production for the half-year to 30 September 2021 was 2,553 tonnes, 13% lower than 2,929 tonnes produced in the same period last year. The decline was mainly due to the head grade of 1.26%, which was 22% lower than for the 6 months to September 2020. In addition, and as previously reported, the late commissioning of the Shaft Re-deep and Tie-in project, resulted in only four (4) days of production in the month of April 2021.

Tonnes ore milled of 241,325 were 15% higher than the 209,153 tonnes ore milled in the same period last year as the mine initiated the transition from the high grade, low volume strategy to the new low grade, high volume strategy. As the high grade massives (which constitute 5% of the resource) get depleted with depth of mining, ore head grade will continue to decline in view of the fact that the Company’s ore reserves and resources are predominantly low grade. The new strategy thus presents the most effective model of exploiting the mineral resource whilst guaranteeing the business’ long term economic sustainability.

In making the transition to the new mining strategy, the business is also continuing with its capital expenditure/re-investment program, with specific emphasis on replacing the dilapidated and obsolete underground mining mobile equipment. This will assist the business to mine and process higher volumes of ore, as distinct from the historical over-mining of high grade massives, which approach is being corrected through the new mining strategy. In addition, the rate of development underground has been increased to unlock the higher volumes required going into the future.

Recovery at 84.2% was 2.8% lower than in the previous year, in sympathy with the lower head grade. Nickel sales volume was 2,549 tonnes, which was marginally lower than last year’s sales of 2,566 tonnes. The average LME nickel price of US$18,234 per tonne was 38% higher than the previous year’s price of US$13,214 per tonne, reflecting the global increase in nickel prices.

The C1 cash cost of US$9,045 per tonne was 49% higher than the previous period’s US$6,067 per tonne, while the C3 All-In Sustaining cost of US$10,364 per tonne was 52% higher than last year’s unit cost of US$6,819 per tonne. While both are disappointing, they were an inevitable result of lower production arising from the delay in the commissioning of the Shaft Re-deepening Tie-in Project. Nickel production in September 2021 was also lower than plan due to both lower tonnage milled and head grade, a result of poor equipment availabilities and unexpected reduction of higher-grade ore sources. In addition, operating costs for the period were higher than plan due to necessary wage adjustments made in April 2021 to align employee wages to the rest of the mining industry. Further NEC negotiated wage increases were effected in July 2021. Costs were also affected by the adverse impact on local operating costs arising out of the disparity between the auction rates and unofficial foreign exchange rates that suppliers use in their pricing models, coupled with the high cost of maintaining the old and obsolete mining equipment.

In terms of the Exchange Control regulations, 40% of the Company’s export revenue is compulsorily surrendered to the Reserve Bank of Zimbabwe for Z$ converted at the auction rate. For the six months to September 2021, the Z$ auction rate devalued by just under 4% while the Z$ exchange rate on the parallel market, which local suppliers use in their pricing models, devalued by approximately 50%. The combination of compulsory surrender of 40% of revenue and the discrepancy between the auction and parallel market rates, resulted in an estimated loss to the Company of US$1.2 million for the six months.

The industrial relations atmosphere remained calm throughout the six-month period, as Management continued to proactively and constructively engage employees on all pertinent issues.

Capital Expenditure
The Company continued with its on-going programme to replace old and obsolete mobile mining equipment. Total capital expenditure for the period was US$4.7 million of which US$1.2 million was spent on a new exploration drill rig, a Load, Haul and Dump (LHD) machine and also on major rebuilds of existing LHDs and rigs. A total of US$1.1 million was spent on Haulage and Ramp developments to provide operational access to deeper resources.

The Sub-vertical Rock Winder was upgraded at a cost US$448,000 while US$402,000 was spent on the refurbishment of the Concentrator. Both were carried out in April 2021 during the Shaft Re-deepening shut down.


Income Statement

Although sales volume was in line with the volume sold in the comparative period last year, revenue increased by 41% to US$35.3 million from US$25 million, on account of improved nickel prices.

Cost of sales however, increased by 44% to US$24.3 million, compared to US$16.9 million for the same period last year. The increase in cost of sales was a result of the following factors:

  • Increase in depreciation charge on capitalisation of assets.
  • High cost of refurbishing and maintaining old and obsolete mining mobile equipment.
  • Increase in employee wages to align with the industry averages.
  • Increase in local operating costs which tend to be influenced more by the alternative market exchange rate.

Gross profit of US$10.9 million was 35% higher than last year’s figure of US$8.1 million, in line with the increase in revenue.

Administrative costs for the period of US$3.3 million were 120% higher than the US$1.6 million for the prior period mainly due to the following:

  • Increase in wages and salaries as referred to above.
  • Increase in Intermediated Money Transfer Tax and bank charges.
  • Shangani Mine care and maintenance costs.

Net exchange loss for the period amounted to US$67,467 and was 96% lower than the US$1.5 million for the same period last year due to a more stable auction exchange rate during the half-year period under review.

Profit from operating activities of US$6.2 million was achieved, compared to US$4.7 million in the first half of last year, an increase of 31%.

Profit and total comprehensive income for the period was US$5.8 million, compared to US$3.4 million for the same period last year, reflecting the positive impact of improved nickel prices.

Cash Flow Statement

Net cash flow generated from operating activities amounted to US$2.0 million, compared to a negative US$0.3 million for the same period last year. However, capital expenditure of US$4.7 million and net cash inflows from financing activities of US$0.4 million resulted in a net decrease in cash and cash equivalents of US$2.3 million. Thus, the cash and cash equivalents balance at 30 September 2021, was a negative US$0.5 million.


The average LME cash settlement price for the half-year under review was $18,234 per tonne which was 38% higher than for the same period last year ($13,214 per tonne). The table below shows the monthly average LME nickel prices for the six-month period ended 30 September 2021.

The Board is pleased to report on the performance of the Company for the half-year ended 30 September 2021.


  • As at 30 September 2021, 76.5% of all employees had been fully vaccinated against COVID-19. All employees have since been fully vaccinated.
  • Two (2) Lost Time Injuries recorded in the period.
  • 2,553 tonnes of nickel in concentrate produced, 13% lower than for the same period last year due to lower grade and late resumption of production, as a result of the delayed completion of Re-deep Tie-in project.
  • 2,549 tonnes of nickel in concentrate sold, marginally lower than for the same period last year.
  • C1 unit cash cost of US$9,045 per tonne, compared to US$6,067 for the same period last year due to the lower production and increase in operating costs.
  • Average LME nickel price of US$18,234 per tonne, 38% higher than for same period last year.
  • Revenue of US$35.3 million, 41% higher than for the same period last year in line with increase in nickel price.
  • Profit before tax of US$6.2 million, up 31% on US$4.7 million for the same period last year.
  • Profit after tax of US$5.8 million, 70% higher than for the same period last year.
  • Equipment replacement and upgrade programme continued with US$4.7 million capital expenditure.
  • Post period-end, the Board resolved to migrate the Company’s listing to the Victoria Falls Stock Exchange.


Poor equipment availabilities combined with lower than expected massive grades in September and October 2021 resulted in nickel production for both months being lower than plan. The focus during the remainder of the year will, therefore, be on recovering the nickel in concentrate production deficit and managing costs. Nickel in concentrate production for the full year is thus still expected to be about 6,000 tonnes.

Nickel prices rose to a seven-year high of $20,060 per tonne on the 17th of September 2021, supported by unanticipated demand as Chinese stainless-steel producers ramped up production ahead of the government sanctioned production cuts, due to power rationing. The September 2021 seven-year high was surpassed on the 21st of October 2021 as prices reached $20,530 per tonne in response to surging energy costs.

Fundamentals are strong and supportive of a nickel price increase. The International Nickel Study Group (INSG) (2021) reports that the nickel market was in a 142 000-tonne deficit in the first eight months of the calendar year. Nickel demand from electric vehicles remains high as electric vehicle production and sales in China and Europe reach record highs. LME nickel inventories continued on a downward trend, dropping to 162,690 tonnes at the end of September 2021, compared to 259 182 tonnes at the start of the financial year. Falling stocks and rising energy costs are expected to result in higher prices, going into the next half of the year.

The average LME nickel price is forecast to remain above US$18,000 per tonne for the rest of the financial year.


Mr. Jozef Clifford Behr resigned from the Board on 30 September 2021. He had joined the Board on 1 November 2019 as a Non- Independent, Non-Executive Director. He was actively involved in the corporate restructuring that resulted in the eventual assumption by Kuvimba Mining House, of majority control of the Company. We thank Mr. Behr for his contribution to the affairs of the Company, including his able chairmanship of the Audit Committee. We wish Mr. Behr success in his future endeavours.

Mr. Michiel Jakobus Bronn was appointed a Non-Executive Director on 1 October 2021. Mr. Bronn is a seasoned mining engineer with over 30 years executive mining and project management experience in the gold, PGM and coal sectors in South Africa. Mr. Bronn joined Kuvimba Mining House in May 2020 as Group Chief Operations Officer, a role in which he has responsibility for managing all group mining assets to ensure they meet their respective business objectives.

The Board extends a warm welcome to Mr. Bronn and looks forward to his contributions.


On 15 October 2021, the Board considered and approved a proposal by Management for the Company to be delisted from the ZSE and to subsequently list on the VFEX. A circular with details of the proposal and the benefits thereof has been sent to Shareholders ahead of an Extra-Ordinary General Meeting scheduled for 13 December 2021.

On behalf of the Board
Bindura Nickel Corporation Limited

M.A. Masunda

25 November 2021

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