The Victoria Falls Stock Exchange (VFEX) has announced a trading halt for Bindura Nickel Corporation Limited (BIND.VX) shares effective from Friday, May 3, 2024.
The action follows a government-issued reconstruction order published in Government Gazette General Notice 523A of 2024 on May 2nd. The order specifically targets Trojan Nickel Mine Limited, Bindura Nickel Corporation’s primary asset.
“The Victoria Falls Stock Exchange Limited (VFEX) hereby notifies the investing public that a trading halt has been instituted in the trading of Bindura Nickel Corporation Limited (BIND.VX) shares on the VFEX with effect from Friday, 03 May 2024.
“This follows a notice of reconstruction which has been issued in the Government Gazette General Notice 523A of 2024 issued on 2nd of May 2024.
“The reconstruction order is in relation to Trojan Nickel Mine Limited which is the major asset owned by Bindura Nickel Corporation Limited,” VFEX Chief Executive Officer Justin Bgoni said.
The reconstruction order comes amid financial difficulties and equipment breakdowns plaguing Bindura Nickel Corporation (BNC), Zimbabwe’s largest nickel producer.
The state-owned Kuvimba Mining House subsidiary has grappled with depressed global nickel prices, high production costs, and increasing mining depth. These factors culminated in the September 2023 shutdown of the company’s Trojan Nickel Mine.
Issued under the State Indebted Insolvent Companies Act, the reconstruction order establishes a framework for BNC to address its financial woes and safeguard the interests of various stakeholders, encompassing employees, creditors, and shareholders.
Justice Minister Ziyambi Ziyambi has already assigned Mutsa Remba as the administrator tasked with overseeing BNC’s operations and formulating a restructuring plan to tackle its financial challenges.
The government-gazetted notice states: “The board of the company under reconstruction shall be divested of the control and management of the company’s affairs, and any person managing or controlling the company’s affairs in any capacity other than as simply a member of the board referred to above shall continue in office subject to the control and direction of, and be answerable to, the administrator.”
Remba brings experience to the table, having served as an assistant administrator for Hwange Colliery, another company placed under reconstruction in 2022.
The reconstruction order follows BNC’s completion of the Sub-Vertical Rock Winder Bull Gear Replacement Project, initially anticipated to pave the way for production resumption.
However, a combination of factors, including persistently low global nickel prices, high production costs, particularly electricity, significant mining depth, and low resource grades, continues to cast a shadow over restarting operations.
Tinashe Lusiyano, BNC’s Managing Director, recently outlined the company’s ongoing challenges. In a cautionary announcement, he emphasised that “nickel prices remain depressed on global markets, at unsustainably low economic levels for the business.”
Lusiyano further elaborated that high input costs, especially electricity, coupled with significant mining depth and low resource grade, exacerbate the situation.
BNC also faces difficulties in securing the capital required for retooling, specifically for acquiring additional underground mining equipment and upgrading the processing plant.
This lack of funding has delayed the resumption of mining operations despite the completion of the equipment replacement project.
The reconstruction order is expected to offer BNC a temporary reprieve, allowing the company to restructure debts and develop a plan for returning to profitability. The process is, however, likely to pose significant challenges, with numerous stakeholders impacted by the outcome.
