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Munali Nickel delays resumption of underground production

Munali Nickel delays resumption of underground production
By Chiwoyu Sinyangwe
Wed 18 Nov. 2009, 04:00 CAT

MUNALI Nickel Mine has delayed resumption of underground production after shareholders approved the refinancing deal with Jinchuan Group of China, care and maintenance manager Shaun Vokes said yesterday.

In an interview, Vokes said the mine, which was set to resume output this month would start with underground production next month while the processing plant for nickel was scheduled to start operations in January next year.

Albidon suspended operations at the mine - Zambia's only nickel mine - following a fall in metals prices, which it said had made operations unsustainable.

"The processing plant is going to restart in January while the underground operations recommences in December," Vokes said. "We obviously have to allow the contractor to mobilise the site."

He said the shareholders meeting on October 30 approved the new financing arrangement to deal with the mine's external creditors which allowed the company to be taken over by Jinchuan Group.

"Basically what that meeting did was to approve the financing transaction with Jinchuan," he said.

Vokes said the mine was expected to clinch working capital for final operationalisation.

The mine closed in the first quarter of this year at the height of the global economic recession which depressed the commodity prices.

"By the end of this month, we expect the working capital facility to be reached with one of the commercial banks in China," Vokes said. "It is not yet certain but we are working around US $30 million."

Vokes, however, did not name the Chinese commercial bank expected to provide the crucial financing bridge.

Last September, Barclays Bank Zambia Plc said Jinchuan Group had secured a US $12.6 million facility from the bank for underground mining equipment.

Vokes said the funds would help the re-opening of the mine.

"With this re-financing arrangement for existing underground equipment, we expect the mine to resume operations late October or early November," he said.

Vokes said the Jinchuan Group was now trying to arrange finance for working capital before resuming operations at the mine.
Barclays said the funds would also help Jinchuan to start to manage both its production capacity as well as to meet its financial obligations.

Ore production at Munali in the first two months of 2009 was 74,000 tonnes, below the forecast 87,000 tonnes, mainly due to a lack of equipment and lower grades.

Munali mine, located in southern Zambia, had forecast production of 10,000 tonnes of nickel each year before its shutdown.

Labels: JINCHUAN, MUNALI NICKEL MINE

posted by MrK @ 4:42 PM