It is reported that beleaguered Munali Nickel Mine, Zambia's sole nickel producer, seeks to restructure its operations and capital that will sustain the company and improve efficiency at the unit.
Albidon Limited, owners of Munali nickel mine on Monday announced a string of measures it seeks to undertake, including raising more than USD 30 million of new equity to balance its accounts.
Proposed measures taken by the company’s board of directors include raising more than USD 20 million equity to sustain the mines including restructuring existing finance facilities to reduce its debt portfolio and align payments with revised life of the mine plan, in which China’s Jinchuan invested USD 37 million to jeep it afloat.
Mr Harold Ou Wang MD of Albidon Limited said that Munali nickel mine there are plans to review the composition of management and its board and ensure its debt and capital structures, conducted recently by Riverstone Advisory Pty Limited are followed to the latter.
In a statement, Mr Harold believes that the company has excellent assets at Munali mine making it a basis for a sound mining business. Among some of the recommendations made by company advisors, Riverstone, there is need to change management at the mine to ensure the sustainability of the mine and increase efficiency and profitability.
The Riverstone recommendations confirm the board’s belief that the underlying resource at Munali appears capable of supporting a profitable operation, with potential for an extended life of the mine unit. It further affirms that for the company to succeed, it is imperative that the company is successful in completing the restructuring initiatives that the company seeks to pursue.
To lead the company in the next stage of the company’s development, the board commenced a recruitment process for permanent new senior staff with requirement for international mining experience to carry out effective operations at Munali mine.
The company, according to Mr Harold, seeks to reorganize and restructure existing finance facilities to reduce debt and align payments with revise life of the mine plan. The quantum and servicing requirement of Albidon’s debt is disproportional to projected cash flow and the mine life.
According to financial reports of Munali nickel mine, as at June 30th 2011, Albidon had a debt portfolio of USD 125 million including convertible notes with book value of USD 19.6 million and had accrued interest of USD 10.4 million. Jinchuan controlled entities have provided the company all debt facilities.
The company is since seeking strategic and institutional investors to participate in capital raising related ventures. According to the company, the board had contracted Peterson Securities and Rivestone Capital for the purpose of determining the optimum strategy for raising new equity capital for the company, presently embroiled in a spate of tremors at Munali unit.
According to the company, the restructuring of the company is set for the period between now until 31 December this year and it is also expected that Jinchuan Mining Limited’s interest in Munali mine will be diluted as a result of the capital raising.
Albidon and Jinchuan seek to work together and ensure to agree the terms of the restructure of Albidon debt burden to reduce the principle outstanding debt to about USD 50 million and align the repayment terms with the new life of the mine plan.
Jinchuan is prepared the entry of new strategic investors by divesting convertible notes it currently holds and make the company viable and wade its way out of the debt trap.
(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia)
