BCL in bailout negotiations with external suitors
Faith Siako | Friday February 26, 2016 17:19
Speaking during a presentation by BCL Mine at the council session on Wednesday, Mahupela said that the mine, currently facing cashflow problems, has been advised by the shareholder to seek funding in order to keep it sustainable.
He said that the mine is in negotiations with five possible sponsors in Hong Kong, Dubai, New York, Johannesburg and Gaborone.
He said that BCL ought to handle the negotiations in a positive manner in order for them to succeed.
“These are delicate negotiations that require sensitivity to succeed. We need this bridge financing to cover our loss until nickel prices recover,” he said.
He added that BCL had to come up with strategies that would help the mine survive.
”It is important that we take a massive step to keep the BCL Mine solvent so that it does not shutdown,” he said.
Mahupela said that the mine also came up with initiatives that would rationalise services in order to reduce costs. He said BCL might also consider reducing management positions so that the mine does not spend more money on salary payments. “We might consider reducing managerial positions and operate with miners,” he said.
He also stated that the mine intends to reduce their services with 40 percent.
He noted that BCL Mine has debts hence the need to work smarter and cleaner as the current sales of mattes is not enough to keep the company solvent. He said that the mine has not been doing well due to nickel prices that have dropped.
He said that on an annual basis the mine should be making P3.1 billion, but commodity prices have negatively affected the mine, which is only making P1.7 billion.
He also said that due to failure to pay suppliers, some are withholding their services.
He said that this has detrimental impact on production.
He, however, said that government has given BCL Mine a letter of comfort for suppliers and will soon pay them.
“This has, however, lost impact as suppliers insist on ‘cash is king’ and some have already lost their patience,” he said. He added that they have also decided to put their corporate social investment projects on hold until the commodity prices improve.