26 December 2011
ALBIDON, the owners of Munali Nickel mine has opened negotiations with a potential investor over possible take over.
Company secretary Noel McAuliffe said in a statement at the weekend that, the mine which suspended operations last month due to cash constraints, had opened its books to the undisclosed bidder to complete a due diligence report and hopefully take over their troubled unit in Zambia.
Munali, the sole nickel mine in Zambia run by the Chinese, has been dogged by several operational problems which include a sinkhole and low grade recoveries.
“Details of the discussion and the identity of the third party are subject to normal confidentiality for now, but we shall keep all informed,” Mr McAuliffe said.
The discussions follow a strategic review of the company operations which started in October, and later concluded that the mine located in Mazabuka, needed to attract a new strategic investor.
The Chinese investors decided to suspend operations of the company, putting it on care and maintenance but kept all its unionised staff on the pay roll until a new partner was found.
Jinchuan, the majority shareholders of the mine suspended operations after production problems and lower nickel prices which prompted a cash flow shortage.
It is the second time Albidon has been forced to seek strategic partners with the first being in 2009 when it called in administrators after a collapse in nickel prices following the global financial crisis.
China’s Jinchuan Group came to its rescue at the time, injecting US$34.8 million and taking a 50.1 per cent stake in the company and resumed operations.
The mine has been plagued by a series of mining misfortunes that were heightened by the discovery of underground sinkholes which threatened not only the future of the mine but the community.
This has forced the mine to downwardly revise the year end production target twice from the initial 90, 000 tonnes to 55 ,500 tonnes and later by 21 per cent to 44, 000 tonnes for 2011 in June this year.
In September, Albidon announced the suspension of trading of shares at ASX, claiming the company had over announced the production levels of nickel and said the new downward revised figures had upset the minority shareholders.
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