Bindura Nickel Corporation Limited ( HY2020 Interim Report

We have extracted the Chairman’s Statement from the 2020 half year report for Bindura Nickel Corporation (, listed on the Zimbabwe Stock Exchange:

Highlights for the year under review are summarised below:

  • Zero fatalities;
  • 4% decrease in nickel production to 2 943 tonnes (H1 FY2019: 3 076 tonnes);
  • 1% increase in average nickel price realised to US$9 052/t (H1 FY2019: US$9 001/t);
  • Revenue increased by 8% to US$28.3 million (H1 FY2019: US$26.2 million);
  • Profit after tax: US$6.6 million, up 136% year on year (H1 FY2019: US$2.8 million);
  • 1% increase in nickel sales tonnage;
  • 5% decrease in cash costs (AISC) to US$6 574/t (H1 FY2019: US$6 900/t);
  • Capital expenditure of US$3.0 million incurred during the period under review;
  • Upgrade and refurbishment on the smelter 83% complete;
  • Smelter Bond obligation of ZWL3.0 million for the half year was fulfilled.


No fatalities were recorded at any of our operations or projects during the year. The Board and Management take safety very seriously, given the inherently hazardous nature of mining. We have a zero tolerance to accidents. SHEQ systems are continually being developed and implemented to improve performance. The main area of focus on safety is to change the behaviour of employees in order to prevent or minimize accidents in line with the Corporation’s zero harm goal.


Income statement

The Company sold 3 002 tonnes of Nickel in concentrate, compared to 2 980 tonnes sold in the comparative period last year. An average nickel price of US$9 052 per tonne was realised for the sale of Nickel in concentrate, compared to US$9 001 per tonne achieved in the same period last year. This translated to a turnover for the half-year of US$28.3 million (2018: US$26.2 million). The cost of sales ofUS$16.3 million was 10% lower than the comparative figure in the prior year of US$18.0 million.

Gross profit improved by 47% to US$12.0 million versus the prior year’s achievement of US$8.2 million. The Company realised a profit and total comprehensive income of US$6.6 million,compared to US$2.8 million in the prior year. The improvement of 136% was anchored on exchange gains and a decrease in the cost of sales which, in turn, was attributable to the ongoing efforts to contain costs as demonstrated by the decrease in cash costs, year on year.

Balance sheet

Total equity of US$66.1 million was 11% higher than the comparative figure of US$59.5 million as at 31 March 2019. This was attributable to the increase in profit. Non-current liabilities of US$19.7 million increased by 3% from $19.2 million as at the last year-end mainly due to an increase in deferred taxation despite the decrease in interest bearing debt. Current liabilities increased by 9% from US$20.5 million to US$22.3 million, mainly due to an increase in trade and other payables. Current assets increased by 33% from US$22.1 million to US$29.3 million as at the last year-end. The increase was driven by an increase in trade and other receivables.

Cash Flows

The Company maintained a number of overdraft facilities secured from local financial institutions in order to finance its working capital requirements. The ZWL3.0 commitment due to Bondholders at the September 2019 interval was fulfilled.


Ore mined during the 6 months to 30 September 2019 was 215 338 tonnes while ore milled was 215 728 tonnes. Head grade was 1.34% which was lower than the year-end figure of 1.64%. The decrease is a reflection of the mining mix whereby more of disseminated ore was mined than the massive. Recovery was 86.1%, compared to 86.3% achieved as at 31 March 2019. Nickel production was 2 943 tonnes, which was lower than last year’s output of 3 076 tonnes. The decline was in line with the lower ore grade achieved, year on year. The all-in sustaining cost of producing Nickel in concentrate decreased from U$6 900 per tonne to US$6 574 per tonne. The decrease was a reflection of the ongoing efforts to contain operational costs. The industrial relations atmosphere was reasonably calm throughout the year, thanks to the ongoing proactive and constructive engagement of employees on all pertinent issues.


Total capital expenditure for the 6 months was US$3.0 million, mainly in respect of the following projects:

  • Shaft re-deepening: (US$1.2 million)
  • New LHDs: (US$0.7 million)
  • New Dump Trucks: (US$0.7 million)

The Smelter Restart Project is still at 83% complete.

The Refinery and Shangani Mine remained under care and maintenance.


BNC sold concentrate containing 3,002 tonnes of nickel compared to 2,980 tonnes for the same period (six months) in 2018/19, an increase of 1%. The sales for the second half of last year were 3,430 tonnes.

Nickel prices remained subdued into the year due to weak stainless steel demand, overstocking and the lack of real demand in class 1 nickel in the automotive industry. Prices were given a boost above US$18 000 per tonne after the Indonesian government announced that it would bring forward the raw ore exports ban to 1 January 2020 from 1 January 2022. Indonesian ore feeds into nickel pig iron (NPI) production in China. This is the second time that Indonesia, which supplies 12% of the global nickel, has banned raw ore exports in a bid to promote beneficiation through the construction of smelters in that country. Ore from the Philippines is of low grade when compared to Indonesian ore. The latter ore is, however, expected to fill the supply gap. The market suggests that stainless steel mills will look at options of reducing the demand for new nickel units after the Indonesian ban. The options include moving from the 300 series to the 400 series, the increased usage of stainless steel scrap in stainless steel production and a planned increase in ferro nickel imports from other countries. London Metal Exchange (“LME”) stocks have fallen below 100 000 tonnes for the first time since 2012, though analysts believe this was a result of the movement of ore into off-warehouse storage  facilities. This has resulted in a short term market tightness in LME deliverable nickel, despite the oversupply of non LME deliverable products like ferro nickel and nickel pig iron. On the other hand, the market is bearish with the United States of America / China trade talks not having yielded a result and due to the recent unrest in Hong Kong.

The market is still expected to be in deficit in 2019, though the deficit is expected to be smaller compared to the previous year. Nickel demand is expected to remain high, with a projected average growth in excess of 4% per annum year on year. Stainless steel will remain the main consumer of nickel and is expected to average 67% while the use of Nickel in the production of electric vehicles is expected to increase to 18% by 2025. Current and new Nickel sulphide projects are not expected to meet the demand. The required nickel units are likely to come from the development of products based on laterite ores using high pressure acid leaching (HPAL) to convert ores to matte then to nickel sulphate. The next two years will reveal whether the technically and environmentally challenging HPAL plants will succeed in delivering the required nickel units.


Under the current circumstances, it is not feasible to declare a dividend for the period under review.


Prior year tax dispute

It was reported in the financial statements for the year ended 31 March 2019 that the Company was involved in a dispute with the tax authorities emanating from tax assessments which were issued in February 2018, amounting to an estimate of $29 million. The assessments mainly related to historical issues pertaining to how the Company was structured many years ago as well as issues arising from differences in the interpretation of standard commercial agreements in the mining industry.

Following further engagements with and submissions to the tax authorities, the tax assessments were revised downwards to approximately $14 million. Both parties agreed to declare a dispute in respect of the outstanding amount and to pursue the matter through the courts. The matter is now before the courts pending hearing. Except for this disclosure, no provision has been made in these Financial Statements with respect to this contingent liability. Based on legal advice received to date, the Company has acted within the statutes of the law. The Directors are still of the view that a positive resolution to this matter will be reached. At the time of this half-year report, the Company was not able to reasonably estimate the likely timing of resolution of the matter.


I am pleased to announce that, after several Cautionary Announcements concerning the numerous efforts by the Joint Administrators of Asa Resource Group Plc (“Asa”) to dispose Asa’s shareholding of 74.73% in the Company, a Sale and Purchase was finally concluded on 25th August 2019. The new Shareholders are going through all the necessary regulatory procedures, after which a final announcement will be made soon.


Subsequent to the recent change in shareholding, the following changes to the Board of Directors have taken place:

  • With effect from 31 October 2019, Messrs Olivier Alain Barbeau, Oliver Mandishona Chidawu and Toindepi Retias Muganyi resigned from the Board;
  • With effect from 1st November 2019, Messrs Jozef Clifford Behr, Obey Chimuka and Christopher Fourie were appointed to the Board as Non-Executive Directors;
  • With effect from 1st December 2019, Mr Alex Peter Danso resigned from the Board

I would like to thank Messrs Barbeau, Chidawu, Danso and Muganyi for their sterling contributions to the growth of BNC especially during Board and Committee meetings. I wish them success in their future endeavours. I also welcome Messrs Behr, Chimuka and Fourie to the family of BNC and wish them a long and fruitful tenure as Directors of the Company.


On behalf of the Board, I wish to place on record my sincere gratitude to management and staff for their dedication and hard work during the year under review .

On Behalf of the Board
Bindura Nickel Corporation Limited
Muchadeyi Ashton Masunda
Board Chairman