Monday, March 20, 2023

Clean BCL balance sheet to attract cash for Norilsk assets acquisition

BCL, the copper/nickel miner said the impending conclusion of a deal to acquire Norilsk’s Nickel assets in Africa has been made possible by the balance sheet restructuring that allows the company to borrow to finance such transactions.

The company needs P3 billion to wrap up the dealÔÇöwith the company saying it will finance the transaction through its own resources and debt.

The Botswana government earlier in the year made a bold move by becoming a 100 percent owner of the Selebi Phikwe based mining outfit after negotiating the exit of the Russian company.

Board Chairman, Dr Akolang Tombale, said in July that BCL has settled the P3.3 billion it owed government through a combination of P1 billion in cash and P2.3 billion balance as a way of issuance of shares.

Government also reduced the tax burden from its 40 per cent to the industry norm of 22 per cent while royalties were reduced to 3.41 percent on gross income of 3 percent.

BCL’s General Manager, Mahupe said this week this move will come in handy as it makes it attractive to lenders.

“…I am delighted to inform you that this transaction (purchasing of Norilsk assets) has been made possible by, among other things, the successful cleaning of the balance sheet,” he said.

“We are thankful to Botswana Government for its foresight in facilitating and supporting the restructuring of the BCL Balance sheet and this transaction as elaborated during the July press briefing by the board chairman.”

Mahupela bemoaned that the debt was an impediment to its delivering of its new strategy and now with a clean balance sheet, ‘we can face the future with a lot of optimism to attract investors and continue to implement its initiatives under Polaris II.’

Originally, the government started providing money for the mine in the form of emergency funding followed by debt financing.

By 1999, government was said to have spent P7 billion on BCL to save the mine from closure and also to avoid job losses and its impact on the small mining town of Selebi Phikwe.

At a time when most of investors were selling their shares in the company, the government stood by the side of BCL in a bid to save it from collapsing under huge debts.

At the height of high commodity prices, including base metals, BCL managed to keep some cash amounting to P3 billion although P600-700 million was set aside for rehabilitation.

The original shareholders who started the mine wanted to close the mine and leave and this left government owning 93.6 percent of BCL while the remaining 6.4 percent was held by Norilsk Nickel. Now government has bought Norilsk out to own 100 percent of BCL.

Initially, the government held 35 percent, Norilsk 25 percent while Botswana RST Ltd held 40 percent.

Although BCL accounts for only 1 percent of the world nickel production, it runs a big underground mining comprising four shafts. It treats three million tonnes of ore per annum from its three underground mines, namely Phikwe Central, South East Extension, Selebi and Selebi North
BCL employs about 500 people and its annual turnover is believed to be around US$200 million (about P1.8 billion) and total assets of US$800 million (over P7 billion).

BCL signed an agreement with Norilsk Nickel on October 17, in South Africa to formalise the acquisition of Norilsk Nickel’s African assets for a consideration of US$337Million or P2.9 billion.
Through this transaction Norilsk Nickel has sold to BCL its operations in Africa which include its 50 percent participation interest in the Nkomati Nickel and Chrome Mine in South Africa, and its 85 percent stake in Tati Nickel Mining Company in Botswana.

Mahupela said the Purchase Consideration will be funded through a combination of BCL’s cash resources and debt.

The deal however is subject to Competition Authorities in Botswana and South Africa conditionally or unconditionally approving the implementation of the Transaction in both jurisdictions.

It also needs approval of the Transaction by the Financial Surveillance Department of the South Africa Reserve Bank and Bank of Botswana.


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