A Look At Mwana Africa

Mwana announced that it has successfully completed the rehabilitation of the Trojan nickel mine “on time and within budget” and that ‘hot’ commissioning (ie the introduction of ore into the milling circuit) commenced on 8 February. Following the development and ramp-up of the underground mine, Trojan is thus poised to deliver its first nickel concentrate into the market in or before calendar Q213. While this was in line with Edison’s previous expectations – and thus makes no difference to our earnings expectations at this stage – it nevertheless increases our confidence that they will be met, especially in the year to March 2014.

The announcement confirms observations made by Edison at the time of a site visit to Bindura on 2-3 February 2013, at which the final stages of refurbishment and cold commissioning were in evidence. At the time, the crushing circuit was ‘processing’ waste, while the mills were ‘processing’ water, with the expectation that they would move to waste imminently and then to ore two days later. All the units of the plant were reported to have been individually tested. In particular, the winders, conveyors, Outotec concentrator and filters were all reported to be problem free. Of particular note compared to a site visit at a similar time in 2012 was the refurbished nature of the plant steelwork (pristine vs badly corroded a year ago) and the obvious presence of a productive workforce (vs none a year ago). Once the concentrator has been completed, the team responsible for its refurbishment will be migrated to the Bindura Smelter & Refinery (BSR) complex.

The BSR complex requires a throughput of at least 100kt of concentrate pa to be economic; it also requires ore from a source other than Trojan to blend down the latter’s relatively high magnesium content. As such, the rehabilitation of BSR will require the development of Hunters Road, Shangani and/or the sourcing of ore from a third party within a period of approximately two years. In 2010, the cost of BSR refurbishment was estimated to be c US$30-35m. While there was relatively little opportunity to engage with the local economy at the time of the site visit, the overall impression given to Edison was that the worst depredations of the recent economic crises were abating. Stores appeared well stocked by historical standards and the market at Sam Levy’s mall outside Harare could reasonably have been described as ‘thriving’, albeit there was some evidence of a lack of US dollar notes in circulation, many of which appeared to need laundering – in this case, literally rather than metaphorically.

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