BNC nickel sales down 31 per­cent

Chronicle (Zimbabwe) - - Business Chronicle - Harare Bu­reau

BIN­DURA Nickel Cor­po­ra­tion says sales of nickel in con­cen­trate plunged 31 per­cent dur­ing the first quar­ter of 2017, as vol­umes, re­cov­er­ies and head grade took ma­jor knocks.

First quar­ter pro­duc­tion of nickel in con­cen­trate came in at 1 555 tonnes against 2 246 tonnes in the fourth quar­ter of 2016 while head grade fell 23 per­cent to 1,76 per­cent in this quar­ter.

Asa Re­source Group Plc, the AIM-listed par­ent com­pany of Africa’s only in­te­grated nickel miner, said in a pro­duc­tion up­date last week that head grade de­clined by 4 per­cent to 87 per­cent com­pared to 90,8 per­cent in the last quar­ter of 2016.

BNC’s tonnes mined in­creased by 24 per­cent from the fourth quar­ter of 2016. The tem­po­rary re­duc­tion from 287 261t (Q4 FY16) to 274 474t (Q1 FY17) is due to the plant down time and poor per­for­mance by the en­gi­neer­ing man­ager, whose ser­vices have now been terminated. The plant down time was re­lated to Mill 2’s pin­ion, which was re­placed mid-June 2016.

“I should add, that whilst this quar­ter (Q1 FY2017) was below ex­pec­ta­tions, when com­pared to long-term av­er­age, the de­crease in sales, re­cov­ery and grades are a lot less dra­matic. The main rea­son for Tro­jan’s un­der per­for­mance was re­duced ac­cess to higher ore zones,” said chair­man Yat Hoi Ning.

He said that the price of nickel re­mained stub­bornly close to its 5-year low of around $8 800/t for most of the first quar­ter of 2017, but out­per­formed most base com­modi­ties since July.

An­a­lysts long-awaited this move to oc­cur much sooner and it is now not sur­pris­ing to see solid sup­port for nickel well above $10 000/t. Mr Ning said that this nickel re-rat­ing range will ben­e­fit BNC in the sec­ond and sub­se­quent quar­ters.

In this re­spect, Mr Ning said man­age­ment be­lieves BNC has weath­ered the worst of the storm.

“Op­er­at­ing costs are well un­der con­trol and with the smelter com­ing on stream at a time when the nickel price is nor­mal­is­ing, it is rea­son­able to ex­pect BNC’s fu­ture to be much brighter than in the re­cent past,” he said.

Due to the ab­sence of func­tional smelter, BNC said that it gets ap­prox­i­mately 65 per­cent of the mar­ket price for its nickel. In this quar­ter (Q1 FY2017) the av­er­age nickel price BNC re­alised was $5 728/t (nickel in con­cen­trate), which trans­lates to Lon­don Metal Ex­change mar­ket price of $8 800/t.

Though Tro­jan Mine’s, the in­te­grated min­ing and smelt­ing group’s only pro­duc­ing mine cur­rently, C3 (all in sus­tain­ing) costs in­creased to $6 489/t (Q1 FY2017), but Mr Ning said that the listed miner’s stated medium-term C3 tar­get re­mains in the range of $5 000/t to $6 000/t in the medium-term.

Mr Ning added that it was on record that both the Philip­pines and China have ma­jor en­vi­ron­men­tal con­cerns over nickel pro­duc­tion. This is ex­pected to ac­cel­er­ate the sup­ply deficit and place up­ward pres­sure on the price of nickel; should this hap­pen, it would open fur­ther op­por­tu­ni­ties for the BNC.

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