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Mwana widens FY loss after $43.7m BNC impairment charge
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31st July 2013
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JOHANNESBURG (miningweekly.com) – Aim-listed Mwana Africa widened its loss in the 2013 financial year to $43.5-million, compared with a loss of $6.7-million in 2012, after incurring a $43.7-million impairment charge for its Bindura Nickel Corporation (BNC) operations, in Zimbabwe.

The fall in the nickel price from about $18 000/t when the BNC operations were restarted in 2012 to about $13 500/t recently, has hampered the company’s plans to raise about $15-million in debt or equity for the ongoing ramp-up of the Trojan mine under the current mine plan, prompting Mwana to impair BNC in its 2013 financial accounts.

CEO Kalaa Mpinga pointed out that the company’s profit before impairment was $500 000 – the company’s first profit since 2007 and a “notable achievement”.

He added that current reviews of BNC’s mine plan could result in some reversal of the impairment in future.

Mwana reiterated on Wednesday that it would continue to review its strategic options, which included looking at alternative mine plans that could reduce the funding requirement in the short term.

The company further noted that the recent fall in commodity prices meant it would require further funding in the coming months.

The board of directors is in discussions with existing major shareholders, as well as new strategic investors, to secure additional funding. Mwana is also in discussions with investors regarding possible project funding solutions for its exploration assets.

The weakening commodity prices had also impacted on Mwana’s cash flows at group level and the company will undertake a cost-cutting drive at corporate and project levels.

Despite the challenges facing the company, Mwana chairperson Oliver Baring was confident that the operational fundamentals of the company remained strong and that, subject to securing the required funding, the company would have “a bright future ahead of it”.

Meanwhile, in the 2013 financial year, the company earned revenues of $109.2-million, up 34% on the $81.3-million recorded in the previous year.

Gold sales from the Freda Rebecca gold mine, in Zimbabwe, rose by 37% to 65 350 oz, compared with 47 770 oz the year before. C1 cash costs at the mine were cut by 13.6% to $897/oz, compared with $1 038/oz in 2012.

Edited by: Chanel de Bruyn

 

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Picture by: Reuters