BNC nickel sales 39pc lower in Q1 2016


Production is expected to increase in the second quarter

WORK restart the Bindura Nickel Corporation smelter at Trojan mine was 36 percent complete at the end of the June quarter. According to the Mwana Africa quarterly report, work at its subsidiary’s smelter restart project continued with completion expected next year.

The group said brick manufacture is now reported to be at 95 percent and shipping arrangements from the supplier are in place.

The overall project accomplishment is at 36 percent. The project commitment is at US$13 million and payments to date are US$7 million.

Meanwhile nickel production in the quarter mine slumped 34 percent to 1 349t from 2 032t in Q4 FY2015. Milled tonnage was 8% lower quarter-on-quarter at 129 523t (Q4 FY2015: 140,045t).

“Milled tonnage was mostly affected by availability of active draw points. This affects ore availability and machine utilisation adversely as tramming distances double.

“Production is expected to increase in the second quarter due to the ongoing 100-day “Rapid Results Projects” which is expected to increase the number of draw-points and reduce the LHDs’ hauling distances,” said Mwana

The head grade was 26 percent lower at 1,2 percent compared to 1,67 percent in Q4 FY2015 due to lower production of massive ores areas compared to the previous quarter as recovery was 3 percent lower at 84 percent against 86,9 percent in Q4 FY2015.

Mwana said the average net realized nickel in concentrate price dropped 11 percent to US$8,461/t compared to US$9,489/t in Q4 FY2015. Nickel sales were 39 percent lower at 1,267t compared to 2,072t in Q4 FY2015 due to lower production. Analysts predict an eventual improvement in the nickel price as demand is expected to increase, though the timing of this is uncertain.

Cash costs increased by 29 percent to US$8 901/t (Q4 FY2015: US$6,926/t) and all-in sustaining costs increased by 35 percent to US$9,736/t (Q4 FY2015: $7,209/t) due to the lower production. “The company has implemented various cost-reduction initiatives to combat the effect on profits of lower nickel prices. There is a particular focus on cost reduction throughout the organisation.”

Mwana’s Executive Chairman Yat Hoi Ning said Trojan mine, operations continued to be hampered by the continued upgrading of equipment; upgrading that will ensure there are fewer interruptions in future.
He said underground development work has proceeded more slowly than had been planned, but with the re-deep project now scheduled for completion in October 2015, the current financial year’s second half should see considerable operating improvements that will be followed by the benefits of the smelter restart.

He said during the quarter under review underground operations were affected by temporary poor availability of ore draw points which resulted in lower utilisation of equipment and increases in underground transport equipment which resulted in slower mining rates, though these should improve sharply during the current quarter.

Mwana Africa’s other operation in Zimbabwe, Freda Rebecca gold mine saw production increasing to 16,985 ounces (oz) in the quarter compared to 13,443oz in Q4 FY2015.

The mining group said the production increase was mainly attributable to the 11 percent increase in the mill’s average feed which amounted to 2,03g/t from 1,81g/t in Q4 FY2015.

During the quarter, tonnes milled decreased 0,3 percent to 293,759t compared to 297,953t in Q4 FY2015, mainly due to a 1 percent decrease in mill running time.

Gold recovery rate for marginally declined 1 percent to 82 percent from 83 percent in Q4 FY2015. Mwana said C1 cash costs were 25% lower in the quarter under review at $930/oz from $1 234/oz in Q4 FY2015 largely because of an increase in ounces produced and a 5% reduction in operating costs.

All-in sustaining costs were cut 24% to $1 093/oz from $1,429/oz in Q4 FY2015 while the average gold price received in the quarter was 3% lower at $1,186/oz compared to $1 223/oz in Q4 FY2015.
Ning said at Freda Rebecca the average gold price received was $1 186/oz, its lowest in several quarters but the mine countered the adverse effect by producing more gold which, in turn, contributed to a significantly lower cash cost of $930/oz and an all-in sustaining cost of $1 093/oz.

“This means the mine remains operationally profitable and will be maintained in that state,” he said.

Mwana Africa also has operations in South Africa and the Democratic Republic of Congo. FinX