BCL plans to borrow P2.6bn from markets
Brian Benza | Thursday April 21, 2016 18:00
Addressing the media yesterday, acting divisional manager (finance and administration), Tobokani Mosetlha said they have engaged Barclays Africa group to facilitate the bond issuance.
“The funds would be used to settle a $100 million facility we recently acquired from Barclays as well as finalise the acquisition of a 50 % stake in Nkomati Mine in South Africa,” he said. “The balance would go towards working capital requirements. Due to the size of the bond, the plan is to open it to both foreign and local investors.”
According to Mosetlha, BCL has already received the $100 million loan from Barclays and a large part of it has gone towards settling debts to creditors amounting to about P600 million. As at end of February 2016, the cash-strapped copper and nickel miner owed its 620 listed suppliers P595 million: P452 million owed to local suppliers and P143 million to foreign ones.
Mosetlha could however not put an exact figure on the amount BCL has to put aside for the finalisation of the deal to acquire a 50 percent stake in Nkomati.
As part of a 2014 deal, BCL agreed to buy an 85 percent stake in Tati Nickel Mine as well as 50 percent of Nkomati from Russia’s Norilsk for $337 million. Mosetlha added: “The purchase price is still fluid, it will depend much on the obtaining international price of nickel at the time we conclude the deal. At the time we started negotiations almost two years ago, the price of nickel was around $9 per pound but it has now gone down to $4 per pound. We also cannot put a timeframe as to when the deal will be completed as we are still held up by regulatory process in South Africa for the mineral rights of the mine to be transferred from the previous owners to the new joint venture between us and African Rainbow Minerals.”
Although the acquisition hasn’t been completed yet, BCL is already processing nickel concentrate from Nkomati as provided by the 2014 agreement. In 2016, BCL plans to process 15,000 tonnes of concentrate of nickel from the South African mine contributing about $23 million (P250 million) to BCL coffers. In 2015, BCL produced 139,000 tonnes or $305 million of nickel.
BCL has also asked government to defer its tax obligations for 2015 and this year as the company battles to stay afloat.
Due to the slump in commodity prices, two copper mines, Discovery Metals’ Boseto Mine and African Copper’s Mowana Mine were liquidated in 2015 while government also deferred copper royalty payments for all base metals miners.