• The Company suffers a slump in volume performance following a major breakdown in equipment.
• Ore mined was 49% lower than for the same period last year.
• Ore head grade, at 0.74%, was 53% lower than for the same period last year

Bindura Nickel Corporation Limited has published a trading update for the third quarter and the nine months that ended 31 December 2022.

The Company suffers a slump in volume performance following a major breakdown that was experienced on a Sub-vertical Rock Winder (“SVR”) at the Trojan Nickel Mine. The SVR is used to hoist material (ore and waste) from underground mining operations and following its breakdown profitability was weaker than in the preceding period.

The breakdown, which occurred on 10 October 2022, led to the temporary stoppage of ore hoisting operations and, consequently, the production of Nickel concentrates. The SVR was realigned and recommissioned on 30 November 2022 however it is expected to be replaced in the second quarter of FY2024.

As a result of the SVR breakdown, ore mined was 49% lower than for the same period last year. Tonnes milled decreased by 48% in comparison to the corresponding period last year, in line with the decrease in tonnage mined. Ore head grade, at 0.74%, was 53% lower than for the same period last year, due to the lower proportion of high-grade massive ores in the tonnage mix. Nickel in concentrate produced was 80% lower than for the same period last year, reflecting the lower ore tonnage milled. Moreover, nickel in concentrate sales for the period was 84% lower than for the same period last year, in line with the lower production.

Aggravating this challenge was the aggressive policy that the government enforced in its attempt to arrest the inflation that had soured up to 255% in November 2022. A tight and aggressive policy in the period meant that it would be relatively more expensive to engage in capital expenditure, such as equipment repair.

The measures implemented included a bank lending rate of 200% and 100% per annum for corporations and individuals respectively. This measure was also complemented by the introduction of gold coins to mop up excess liquidity in the economy, as part of the Reserve Bank of Zimbabwe’s open market operations. As a result of the above measures, Zimbabwe’s annual inflation rate declined from 255% in November 2022 to 243,8% in December 2022. Moreover, the widening gap between the unofficial and official foreign exchange rates began to narrow.

The average London Metal Exchange (“LME”) Nickel price of United States dollars (“US dollar”) 25,349 per tonne was 28% higher than the price of US$19,818 per tonne which was realized in the comparative period in the previous year. The price improvement was attributable to the global increase in the demand for Nickel. Due to the slack in volumes, the company was unable to benefit from these global price dynamics.