PAN African resources firm Mwana Africa‘s board of directors is set to meet on Thursday to consider whether or not to float a $20 million bond to fund its $26 million smelter restart project.
In June, the Mwana Africa-owned Bindura Nickel Corporation indicated that it would mobilise internal resources to finance 50 percent of the project costs but a proposal seen by The Source indicates that the company could opt for a Secured Fixed Rate Redeemable bond.
Mwana Africa head of investor relations Caroline Mathonsi told The Source that the bond route was being considered with the board yet to come up with a position.
“The decision is still up to the board. They have a meeting this week (Thursday) and by Friday we will have a position,” she said.
In Zimbabwe, bonds are now seen as a tool for plugging funding gaps arising from an underperforming financial sector.
The draft document seen by The Source proposes a five-year bond with an interest rate of 10 percent per annum payable semi-annually in arrears.
BNC has applied for the bond to be accorded Prescribed Asset Status by the Minister of Finance and Liquid Asset Status by the Reserve Bank.
“The bond will be guaranteed by Mwana Africa PLC to the extent of the outstanding bond amount, including accrued interest at any time during the tenor of the bond,” said BNC in the proposal document.
In August, Mwana Africa chief executive Kalaa Mpinga told shareholders that preparatory work on the smelter had commenced, with the project team having been recruited, while most of the key components of the engineering designs had also been completed and orders for key technical components placed.
Site preparations and demolition of some of the infrastructure had also reached advances stages, he said.
The smelter which is expected to start operating during next year would offer significant financial and strategic benefits to BNC by producing and selling higher-value nickel leach alloy, cutting on transport costs and expenses associated with selling concentrates.