Mining index scales two-year high

24 Aug, 2014 - 06:08 0 Views
Mining index scales two-year high Makomo mine.. Picture by Percy Musiiwa

The Sunday Mail

Makomo mine.. Picture by Percy Musiiwa

Makomo mine.. Picture by Percy Musiiwa

THE index of listed mining companies breached the psychological 100-point mark last week, rising the most in two years, spurred by nickel producer, Bindura Nickel Corporation.

The index finished 4,6 percent or 4,50 points stronger at 101,58 points on Monday, its highest level since early August 2012, when it topped 112 points.

Minings traded unchanged on Tuesday and Wednesday, but the period since May has seen the index buck the downtrend.

Since January, the resources index, which is made up of Bindura Nickel Corporation (BNC), Falgold, Hwange Colliery Company (HCC) and RioZim, is up more than 120 percent, but significantly down from its highest in the last five years of 291.58 points recorded on 1 July, 2009.

In July this year, the index climbed 55 percent after rising 77 percent growth in June and 20 percent in May.

The rally has been sustained by Bindura, which has swung back to profitability and is guided by analysts to remain profitable going forward.

Shares of Bindura have spiked 350 percent on a year-to-date basis.

The stock closed at US9c on Wednesday.

In the full-year to March 2014, the nickel producer reported after tax earnings of US$23,7 million against a US$13 million loss in the comparable period last year.

Net cash from operating activities improved from a negative US$14,3 million last year to US$8 million.

Bindura’s net asset value climbed 750 percent from US$3,3 million to US$28 million.

Equity analysts ABC Stockbrokers are targeting a 12-month price of US13,53c on the back of a 50 percent growth in revenue in 2015 to US$98,6 million.

Bottomline profit is expected to rise 9,3 percent to US$25,9 million.

Bindura owns the only fully integrated nickel mine complex in Africa including Trojan mine, Shangani mine, an open pit resource Hunters Road Project and a refinery complex situated in Bindura.

Although Zimbabwe boasts an array of over 68 minerals from gold to diamonds to platinum to chrome and iron ore, only four mining firms are traded publicly on the local stock market.

The country’s biggest platinum producer Zimplats is listed on the Australian Stock Exchange .

Giant gold miner, Metallon Gold, which owns five large local gold companies is quoted on the Johannesburg Securities Exchange (JSE).

Numerous other companies extracting Zimbabwe’s minerals remain private.

Since January, Hwange has crashed 32 percent, Falgold 20 percent and RioZim 20 percent.

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