Bindura Nickel production down 16% in Q3, Smelter Restart at 78%
HARARE – Bindura Nickel Corporation’s (BNC) nickel-in-concentrate production was16% lower in the third quarter to December at 1 571 tonnes compared to 1 866 tonnes in the previous quarter despite significant increases in both mining and milling output.
Parent company ASA Resources in its quarterly operational update said mining constraints for the quarter included low availability of equipment due to commissioning challenges but production is expected to improve in the ensuing quarter.
“Production is expected to improve in the fourth quarter going forward as equipment availability is expected to improve. The prioritising of ramp mining will increase ore sources to improve production,” says group chief executive officer Yat Hoi Ning.
Ning said the contractor has augmented both the pieces of equipment and its maintenance team to ensure sustained performance moving forward into the fourth quarter and availability of additional sources of massives will boost production.
During the quarter, mined tonnage was 19% higher at 123,532t compared to Q2’s 104,018t as a result of hoisting which improved in the quarter mainly due to increased scooping and fixed plant stability.
Head grade was 26% lower at 1.495% compared to 2.016% in the second quarter while recovery was 4% lower at 85.6% on prior quarter’s 89.1%.
Nickel sales volume for the period was 18% lower at 1,610t compared to 1,971t in Q2 as average net realized nickel-in-concentrate price was at $7,004/t up from $6,668/t in Q2.
According to Ning, nickel prices has been fluctuating between $8,800/t and $10,800/t for many months, mainly due to the news coming from the Philippines and Indonesia to eradicate more environmentally controversial mining practices.
“It would appear that a consensus is emerging and the Philippines government will implement its original plan to curtail the shipment of unprocessed ore this should stabilise the market,” he said.
All-in sustaining C3 costs of nickel-in-concentrate increased 27% to $6,554/t from Q2’s $5,151/t while C1 cash costs for nickel-in-concentrate increased by 29% to $6,159/t on prior quarter at $4,782/t.
Meanwhile, Ning said the Smelter Restart Project has progressed 78% and a 12-month moratorium was negotiated on the first repayment of the principal of BNC smelter bond. The expected completion date of the project is during the 2017/18 financial year.
“In the meantime, BNC continues to explore conversations with third party nickel producers in the region. As the price of nickel recovers more concentrate will come to the market and an off-take deal would be positive for the economics of our smelter,” he said.
He added that there-deepening project to extend life of mine by 5 years and allow drilling to evaluate resources below 45/0 level has progressed well.
Gold production at Freda Rebecca decreased 3% in Q3 FY2017 to 15,365oz compared to 15,904oz in the previous quarter as a result of a 22% decrease in feed grade and 2% decrease gold recovery rate.
Tonnes mined for the quarter decreased 14% to 311,349t from 363,082t in Q2 and the decrease was part of the company’s strategy to align throughput to processing plant capacity.
However, tonnes milled increased 21% to 319,026t in Q3 FY2017 compared to Q2’s 262,633t largely on the backdrop of the ramping–up of new plant throughput.
The feed grade for Q3 FY2017 decreased by 22% to 1.78g/t from 2.28g/t in Q2 attributable to high internal dilution in one of the main production stopes.
As a result, gold recovery for Q3 FY2017 decreased to 83% from 84% in Q2 due to the decline in feed grade and contamination by fine carbon due to worn out carbon escape screen.
During the quarter, C1 cash costs increased by a marginal 1% to $956/oz from $944/oz in Q2 as a result of a 3% decrease in gold production.
All-in sustaining costs realised a net decrease of 5% from $1,115/oz in Q1 FY2017 to $1,107/oz, a result of other income of $1.1 million received from the Reserve Bank of Zimbabwe gold producers’ incentive scheme.
During the quarter, Freda Rebecca earned $1.3m in export incentive cash credits for the period to December 2016 under the RBZ export incentive scheme.
Ning added that Freda also won the inaugural ‘Best Large Scale Top Producer’ award, which attracts an additional 2.5% export incentive bonus credits for the period January to December 2017.
“This will give a total export incentive in the next 12 months of 5%, which translates to more than $4.5 million in cash rebates,” he said.
In addition to that, Freda made an insurance claim following a serious incident in 2016 amounting to $3.6 million. Equipment claims do not take much time, however, claims for consequential loss for business interruption are often protracted and the amount of this claim was increased and Freda awaits a final settlement proposal.
Ning also said the Group will continue to integrate functions between corporate and subsidiaries, streamlining procurement and merging accounting and administrative roles, adding that while the Group’s corporate overhead continues to be at an all-time historical low, costs at the subsidiary level are still higher than they should be.