Albidon Zambia Limited has suspended trading of stocks on Toronto capital market following turbulences at its unit in the Southern African nation to try and rectify the problem affecting production of nickel.
There was no immediate comment from management officials both in Zambia and in Australia when contacted by phone or email efforts on August 31st 2011 on the matter.
According to a statement posted on the company's website on August 30th 2011, the nickel miner seeks to redress the ongoing problems that have forced management to reduce the forecast production of nickel concentrates by 21% from the initial target of 56,000 in 2011.
According to the company projections, the production of nickel concentrates was intended to increase to 900,000 tonnes per annum and later rise to 1.2 million tonnes by 2013, however it has been in recent months been limping following natural calamities that affected company operations.
In June 2011, the company had turbulence that resulting in a sinkhole being created underground and affected ventilation. The following month, another occurrence arose, prompting the company to restrict mining underground to save equipment and personnel at the mine. The developments have in turn forced minority shareholders consider taking over management of the sole mine in Zambia and ensure its sustainability and save the mine from collapsing, with the increased price of nickel on the international market.
Munali nickel mine is jointly owned by Albidon Limited and Jinchuan Mining group of China, which is reported to be buying all the concentrates being produced at the Zambian unit for onward processing in the Far East country, China.
Meanwhile Munali nickel's net profit after tax declined more than 40% at the close of the financial year ending December 31st 2010 as production hiccups affected the mine in Zambia.
According to a report by the Chinese 51.3% owned mine, net profit after tax dropped to USD 65,095,340 at the close of 2010 compared to USD 410,226 a year earlier. Sales revenue was USD 43.0 million while USD 38.4 million of site based operational costs were incurred during the period under review.
About USD 72.5 million was in reversal of previous impairment while USD 1.8 million was the cost in reversal of previous exploration impairment, USD 7.6 million went into amortisation of mine development and USD 4.0 million went into corporate office costs and USD 2.3 million was incurred in finance costs.
According to the report, the Munali mine site was deemed to be in commercial production as from July 1st 2010 where upon it commenced depreciation of buildings, plant and equipment and the amortization of mine properties.
However, current assets increased by USD 9.8 million as a result of trade receivables increasing with the recommencement of sales to Jinchuan Group. Non current assets increased by USD 96.2 million overall after capitalizing mine property costs of USD 30.9 million, plant and equipment additions of USD 0.7 million, capitalization of exploration of USD 0.4 million and reversal of exploration impairment of USD 1.8 million offset by depreciation charges of USD 2.6 million, amortization of mine properties of USD 7.6 million and reversal of impairment charges of USD 72.5 million.
Current liabilities increased by USD 35.6 million as a result of an increase in trade creditors and accruals of USD 7.8 million, provisions of USD 2.7 million, loans from Jinchuan Group of USD 20.0 million and accrued loan interest of USD 5.1 million. Non current liabilities increased by USD 4.2 million as a result of recognizing a provision for community resettlement of USD 6.7 million of which USD 4.2 million is non current. During the period cash and cash equivalents decreased by USD 1.6 million to USD 11.6 million.
Cash inflows from operating activities of USD 3.2 million are primarily from the mining operations at Munali as well payments of a general, administrative and corporate nature for the corporate head office.
Cash spent on investing activities of USD 25.4 million primarily reflects expenditure on the Munali mine decline and lateral development of USD 21.9 million together with purchase of plant and equipment at the Munali mine of USD 3.1 million and payments for exploration related costs of USD 0.4 million.
Net cash inflows from financing activities of USD 20.3 million comprise primarily of proceeds from an additional loan from the Jinchuan Group of USD 20 million in April 2010 and net proceeds of USD 0.3 million as a result of exercise of options in December 2010.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
