R Tyerman article12 Jul 2014 08:23
Kalaa Mpinga, the Congolese founder and chief executive officer of AIM-quoted Mwana Africa (MWA), says the company will consider starting to pay dividends this time next year, following a turnaround in the year to March from annual losses of $32 million (£19 million) to $44 million profits. This figure was swollen by a $27 million past impairment loss write-back and turnover 30.5 per cent ahead to $142.5 million. Mwana, which is involved in nickel, gold, diamonds and copper and is primarily focused on Zimbabwe though also with interests in the Democratic Republic of Congo (DRC) and South Africa, has scored from a full year’s resumption of production and sales from Zimbabwe’s Trojan nickel mine. This happened to coincide with major producer Indonesia’s price-boosting export ban on the metal.
Recent Investors, several oriental, are pleased, since the shares have surged from a 1.1p 12-month low to 3p, valuing the company at £42 million, though that compares with much higher previous levels. China International Mining Group holds 21 per cent.
The company, whose name means ‘Child of Africa’, restarted Trojan, a long-standing Zimbabwean mine, which has an offtake deal with mining and metals giant Glencore, after a four-year gap, using new mining methods, having discovered higher ore grades with deeper drilling. Mpinga, former luminary of another colossus Anglo American, says it can by blending produce a concentrate at less than $8,000 a tonne, against a London Metal Exchange price of $18,965 a tonne, while overall the company’s Bindura Nickel Corporation division chipped in a profit of $16.4 million, plus a $7.3 million tax credit.
Mwana, which ended 2013-14 with $9.1 million cash, plans to restart a nickel smelter at Bindura, thus boosting profitability by slashing transport expenses, at a cost of $26 million, to be funded half from internal cash flow and half with debt. Mpinga argues this will upgrade the nickel content to 85 per cent and ‘add $5 million to $8 million to the bottom line’.
The company’s Freda Rebecca gold mine in Zimbabwe, with 2.5 million oz. at 2.5grams of gold per tonne of ore generated $77 million of turnover, but output fell 10 per cent to 58,704 oz., as the average price received slipped to $1,319 an ounce and costs reached $1.186, sending its profits down from $42.8 million to $16.2 million. Mpinga blames first-half mill problems and says Mwana is spending $4 million improving things and hopes to tap the mine’s extensive tailings.
The company, which says it is coping with Zimbabwe’s ‘indigenisation’ rules for foreign investors, is not short of other projects. A feasibility study is under way at Zani Kodo, now boasting nearly three million oz. of gold in the DRC, where China’s Zhejian Hailiang is investing $25 million over four years in Katanga copper prospect Semhkat, and Mwana is reviewing restarting diamond mining at K
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