Harare - BNC has withdrawn a cautionary statement issued in December which was issued in respect of a possible controlling stake acquisition in the company by a third party from the current majority shareholders.
BNC is majority owned by ASA Resources which is currently under judicial management and on suspension from trading on the AIM in London where is it listed. ASA resources has interests in gold mining through Freda Rebecca and nickel through BNC.
Freda Rebecca is Zimbabwe’s largest single gold mine producing an estimated 8000 ounces of gold per annum as at 2018. BNC is Zimbabwe largest nickel miner producing an average of 7000 tonnes of nickel per annum. ASA Resources controls 74.73% in BNC and 85% in Freda Rebecca.
ASA had sought to spin-off its interest in BNC in pursuant of a restructuring strategy mooted in 2017 after the company was placed under Administration due to financial mismanagement which resulted in insolvency.
Several manouvers have been undertaken since 2017 in an attempt to salvage the Group and its operating subsidiary. In December 2017 ASA announced that it was in discussion with a substantial listed company and Rich Pro Investments, which both tabled offers to acquire the entire 100% direct interest in Headco which owns directly and indirectly all of the company’s material assets.
The deals however failed to materialize and the pressure on operating subsidiaries to be capitalized mounted into 2018 heightening the risk of insolvency. On 29 January 2018 the AIM announced the cancellation of share dealings in ASA on its bourse, while the local subsidiaries BNC and Mwana went on to apply for voluntary judicial management.
BNC and Mwana contended that they faced serious financial problems and were failing to service debts amounting to millions of dollars as they were now technically insolvent. As at September 2018 BNC’s working capital position stood at -$4.7 million.
In an interview with Equity Axis, Managing Director Batsirai Manhando said despite the technical insolvency, the company was still able to meet its obligations during the course of 2017 and 2018.
“There are some liabilities, which though reported under current liabilities, are not strictly on demand. These include amounts owed to Related Parties, Litigations and Leave provisions and Legacy Housing Scheme of Arrangement with Employees”
“On paper, these liabilities worsen the technical insolvency situation. However, they will not ordinarily be demanded in the normal course of business. If these are excluded, the company would be technically solvent” said Manhando in defense of the company’s position.
On 19 December 2018, BNC went on to publish a cautionary statement, advising shareholders that ASA, had entered in a Sale and Purchase Agreement with a Third Party in relation to the disposal of the 75.7% in BNC. The statement highlighted that the third party was a UK based nickel company with complementary interests in Southern Africa.
As the number of aborted discussion increases worries likewise compound regards the financial status of the company and those falling under ASA such as Freda. The extend of damage inflicted by the fugitive shareholders, accused of embezelment may thus be more severe and reconciliation difficult to make. This becomes a possibility given the lucrativeness of the mines outside of their financial statuses as the largest mines in their respective spaces, which have also been profitable.
-Equity Axis News
