Rise in gold output helps Mwana cut losses

Losses at Mwana Africa have narrowed after the Aim-quoted miner produced more gold in Zimbabwe, while a cash injection from a new Chinese investor has put it in a position to restart its nickel business.

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Mwana Africa mined 47,770 ounces of gold from its Freda Rebecca operations in Zimbabwe in the year to March 2012, up 75 per cent from the previous year. The group said annualised production rate had now reached 71,800 ounces, with the mine again contributing the lion’s share of group revenues, $79.8m of $81.3m, compared with $37.5m of $43.7m last time.

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The group made a gross profit of $34.9m, up from $14.1m, but corporate expenses and the cost of keeping its Bindurra Nickel Corporation operations, also in Zimbabwe, on a care and maintenance basis led to a pre-tax loss of $1.2m (loss of $6.1m).

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Kalaa Mpinga, chief executive of Mwana Africa, said that the group’s ability to refurbish the Freda Rebecca mine and expand production “gave us the experience and credibility required to secure funding for the restart of BNC’s Trojan nickel mine”.

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Mwana Africa bought a 52.9 per cent stake in BNC from Anglo American in 2003, but the Shangani and Trojan mines were closed in 2008 following production problems and a sharp drop in base metals prices.

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Nickel prices have since recovered and in April Mwana Africa raised $32.8m by an issue of new shares to existing investors and China International Mining Group Corporation, leaving CIMGC with a 22 per cent stake and a board seat.

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Mr Mpinga said that the Trojan mine should achieve output of 7,000 tonnes of nickel concentrate, to be sold to London-listed commodities trader Glencore, within two years.

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As well as restarting operations at BNC, the cash raised in April will allow Mwana Africa to push ahead with drilling at its Zani-Kodo gold project in the Democratic Republic of Congo, the focus of the company’s exploration efforts.

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Oliver Baring, chairman of Mwana Africa, said the group had “undergone a substantial metamorphosis” in the past year. “Despite difficult markets and a deepening financial crisis we have taken some major steps forward to ensure the long term profitability of the company.” Shares in Mwana Africa rose 8.3 per cent to 3.9p.

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