Base metals miner Albidon’s difficulties deepened on Friday, as the miner temporarily suspended operations at its Munali nickel mine, in Zambia.
The company said in a statement that with the decline of global nickel prices by around 23% over the past four months, and the less-than-budgeted nickel recoveries at the Munali operation, the company had experienced “serious cash flow difficulties”.
Albidon, which had been in a trading halt since August this year, in October approved the implementation of a series of steps to address the operational issues at Munali, and had employed two financing agencies to work on a strategy to raise equity.
However, the company said on Friday that placing the Munali operations in suspension would allow Albidon’s scarce cash resources to be applied to the restructuring needed to improve its efficiency in the future.
The restructuring initiatives would include the reorganization and restructuring of the existing finance facilities to reduce debt and align payments, attracting new strategic and institutional investors, as well as recruiting new independent directors and senior management.
“The Albidon board remains committed to these initiatives by pursuing all available opportunities, however, there can be no guarantee that alternative finance will be obtained in the near-term and therefore, believes suspending operations is the best option for the company.”
During the suspension of operations, all Zambian employees would retain their positions and full pay, Albidon said on Friday. Employees who have been seconded from the Jinchuan Group would be released from their duties at Munali and repatriated to China, after assisting with department shutdown tasks.
The miner said that since the duration of the suspension of the mining operations was related to the time required for the completion of the restructuring, the company was currently unable to predict the exact length of time in which the operations would remain suspended.
“Albidon is committed to the Munali operation and envisages restarting mining operations as soon as capital restructuring has been completed and a new strategic investor secured,” it added.
The company has now applied to the ASX to lift its trading suspension.