The partial improvement in commodity prices, particularly nickel and other base-metal prices, the continued strengthing of the gold price and improving economic conditions in Zimbabwe bodes well for London-listed resources company Mwana Africa, which has significant investments in the Southern African country.

The group recorded a loss of £37,9-million for the year ended March 31, 2009, mainly as a result of weak trading conditions at its Bindura Nickel Corporation (BNC) operations, which were placed on care and maintenance in a phased approach between November last year and March this year.

“This has been a challenging year for Mwana Africa as we have fought to protect our strate- gic investments and the foundations of our Pan-African, multicommodity strategy. With the improvement in operating conditions in Zimbabwe, we will shortly resume operations at Freda Rebecca [gold mine] and are currently looking at options to resume operations at BNC,” CEO Kalaa Mpinga said in a statement to shareholders.

With nickel prices dropping to below $9 000/t in October last year and production at BNC declining as a result of the difficult economic conditions in Zimbabwe, the group had placed its Trojan and Shangani mines on care and maintenance in November. Production at BNC’s mines dropped to 2 379 t in the financial year, compared with 4 200 t in 2008, while the average nickel price for the year was $16 380/t, compared with $34 194/t in 2008. BNC’s smelter and refi- nery operations had, however, continued to process stockpiles until March 2009.

Zimbabwe has suffered nearly ten years of economic decline. The new unity government has since adopted the US dollar as currency, instead of the Zimbabwe dollar. The country is also seeking billions of dollars in financial support to restart the economy. “We are hopeful that the current gradual recovery in commodity prices and improvements in the Zimbabwean economic climate will allow us to rebuild our operations, as well as give us the opportunity for improved valuations of our assets in the future,” said chairperson Oliver Baring.

Ratings agency Standard & Poor’s said in June that it expected the average nickel price for 2009 to be $12 128/t. The group was investigating restructuring its operations to reduce operating costs and improve its resilience to movements in the market price of nickel. “We are also investigating opportunities to reopen and enhance the company’s Trojan mine, and continue to consider opportunities to develop the significant Hunters Road resource,” stated Mpinga.

The group had spent £3,5-million in capital expenditure at BNC, excluding Hunters Road, during the financial year on, besides other things, the commissioning of the Trojan concentrator and further work on the Shangani conveyor decline. A feasibility study for the Hunters Road project, which had a probable reserve of about 175 086 t of contained nickel and an indicated resource of 53 890 t of contained nickel, had been completed in 2008.

The project would also involve the construction of a new concentrator. The first phase of the project was expected to deliver about 2 500 t/y of contained nickel, while the second and third phases would increase this to about 100 000 t/y of contained nickel, the group stated.

Mwana had spent £1,8-million on the project in the 2009 financial year. Meanwhile, the £4-million first phase of the restart programme at the Freda Rebecca gold mine, would be completed by the end of September, the group reported.

The mine had been put on care and maintenance in 2006, owing to operating difficulties. In March, Mwana took the decision to restart the mine after Zimbabwe announced revised export procedures and allowed companies to operate foreign currency accounts.

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