MIRA
INFORM REPORT
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Report Date : |
13.06.2007 |
IDENTIFICATION DETAILS
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Name : |
ALBIDON ZAMBIA LTD |
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Registered Office : |
Plot No. 204 , |
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Country : |
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Date of Incorporation : |
2000 |
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Legal Form : |
Limited Liability Company |
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Line of Business : |
Engage in mining of nickel. |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
KWACHA 200,000,000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
COmpany NAME
ALBIDON ZAMBIA LTD
ADDRESS
Street : Plot No. 204 ,
Area : Jesmondine
P. O. Box :
50799
Town :
Country :
Telephone :
(260 1) 840 198
Fax : (260 1) 290 088
SENIOR COMPANY
PERSONNEL
Name Position
1. Sixtus Mulenga Managing
Director
2. Davies Simbaya Commercial
Director
Total Employees
400
PAYMENTS
No complaints have been heard
regarding payments from local suppliers or banks.
Subject
was established in 2000 and is a wholly owned subsidiary of Albidon Ltd of
Albidon
Ltd is an Africa-focused exploration and development company with an emphasis
on nickel. It was established in April 2000 and listed on both AIM (London
Stock Exchange - AIM) and ASX (Australian Stock Exchange) stock exchanges in
March 2004.
As
the company has not yet commenced operations it has no financial or payment
record. However in view of the company's ownership and financial backing we
consider it is acceptable to deal with subject for SMALL amounts.
Opinion on maximum credit
: KWACHA 200,000,000 (due notice should be given to the above comments)
Trade risk assessment :
Above average
It is normal accepted
practice for international suppliers to deal on secured terms with Zambian
importers.
PRINCIPAL BANKERS
NAME :
STANBIC BANK ZAMBIA LIMITED
Branch :
Main Branch
PO Box :
31935
Town :
Telephone : (260 1) 229 285
Fax :
(260 1) 221 152
FINANCIAL INFORMATION
As the Company has not
yet commenced production, relevant financial information is not available.
The following
consolidated Balance sheet information as at 31 December 2006, applies to the
Albidon Limited, subject's parent company :
2006 2005
(in US dollars) ASSETS
Non Current Assets
Plant and equipment 266,734 102,404
Mine properties & development 20,841,917 -
Exploration & evaluation expenditure - 9,144,294
Total Non Current Assets 21,108,651 9,246,698
Current Assets
Trade and other receivables 826,626 368,825
Other financial assets 401,758 628,430
Prepayments 129,384 197,930
Cash and cash equivalents 38,276,017 7,734,805
Total Current Assets 39,633,785 8,929,990
TOTAL ASSETS 60,742,436 18,176,688
EQUITY AND LIABILITIES
Capital and reserves attributable
to the Company’s equity holders
Issued capital 1,481,680 893,680
Share premium reserve 67,793,071 22,543,274
Capital raising costs (3,234,600) (1,630,637)
Share capital 66,040,151 21,806,317
Option premium reserve 1,017,471 455,882
Accumulated loss (7,992,222) (5,324,588)
Total Shareholders’ Equity 59,065,400 16,937,611
LIABILITIES
Current Liabilities
Trade and other payables 1,579,575 1,186,571
Provisions 97,461 52,506
Total Liabilities 1,677,036 1,239,077
TOTAL EQUITY AND LIABILITIES 60,742,436 18,176,688
CONSOLIDATED PROFIT AND
LOSS ACCONUT
Sales Turnover :
US DLRS 236,372 - 2005 - exact
(Revenue) :
US DLRS 736,580 - 2006 - exact
Loss for the year :
US DLRS (2,961,822)- 2005 - exact
: US DLRS (2,667,634)- 2006 - exact
Financial year ends 31
December 2006.
LEGAL STATUS AND
HISTORY
Date Started : 2000
History
: The company was established in
The
mine is expected produce approximately 8,500 pa of nickel in concentrate from a
900,000tpa underground mining operation involving straightforward extraction
methods and conventional processing technology.
Capital : not given
Limited Liability Company
with the following sole shareholder :
Albidon Ltd 100%
Level 1,
P.O. Box : 910
Tel : (61 8) 9211 4600
Fax : (61 8) 9211 4699
Subject is a member of
the Albidon Group which includes the following companies :
1. Albidon and BHP
Billiton Limited
2. Albidon and Iamgold
Corporation
3. Albidon and African
Energy Resources Limited
4. Albidon and Zinifex
Limited
ACTIVITIES
The Company is involved
in the following activities :
Subject will engage in
mining of nickel and will Subject operate the Munali Nickel Mine.
Construction
of the mine has commenced, with commissioning of the processing plant and first
deliveries of concentrate in the first half of 2008. Exploration drilling is
ongoing, with the aim of expanding the nickel resource base in the Munali
district.
The
Munali mine will produce approximately 8,500 pa of nickel in concentrate from a
900,000tpa underground mining operation involving straightforward extraction
methods and conventional processing technology.
The
mine will be an underground operation accessed via a 25m deep ‘boxcut’
excavation leading to a nominal 5.0m x 5.5m decline at a gradient of 1 in 7,
providing access to the ore at 25m sublevels.
The
planned mine design utilizes highly mechanized up-hole benching and long-hole
open stope mining methods, resulting in efficient ore extraction and low mining
costs. These mining methods allow for mining from the top down which maximizes
early production of ore.
The
ore will be processed through a conventional flotation concentrator, comprising
a simple crushing and grinding circuit, rougher, scavenger and cleaner
flotation cells, followed by concentrate and tailings thickeners, producing a
high grade nickel, copper, cobalt and PGM concentrate for sale to the Jinchuan
Group of
Initial Mining Reserves:
>From the Indicated
Resource at
The Probable Reserve for
the Enterprise Deposit contains over 82,000 tonnes of Ni, 11,700 tonnes of Cu,
4,400 tonnes of Co, 114,400 ounces of Pd and 50,380 ounces of Pt.
This equates to a rate of
97.2% for conversion of the Indicated Resource to Probable Ore Reserve tonnage,
fully diluted.
Project Life:
The
current reserve base for
Production Rate:
Following
a ramp-up period in 2008 the project is based on a throughput of 900,000 tonnes
per annum for the bulk of the mine life.
When
the project reaches steady state, annual production will comprise approximately
8,500 tonnes of Ni, 1,400 tonnes of Cu, more than 400 tonnes of Co and 15,000
ounces of platinum group metals (PGM) in concentrate.
Metallurgy:
Indicative specifications
for nickel concentrate product from the Enterprise Deposit are as follows:
Ni: 13%
Cu: 2%
Co: 0.7%
Pt: 1.9g/t
Pd: 7.9g/t
In
addition, the concentrate is free of deleterious element impurities and also
has low MgO content and a high Fe/MgO ratio, features that are particularly
attractive for operators of fl ash-furnace type nickel smelters.
Capital Costs:
The
capital costs for the concentrator and infrastructure were compiled by Roche JR
as part of the BFS. These are summarized as follows:
Concentrator USD$ 51 Million
Surface Infrastructure,
including Tailings Storage Facility & Concentrate Storage USD$ 14 Million
Mine Infrastructure USD$
5 Million
Contingencies USD$ 9
Million
Miscellaneous USD$ 1
Million
TOTAL USD$ 80 Million
Working Capital and
ongoing Mine Development Costs will be an additional approx USD$ 25 million.
Cash Operating Costs:
Cash operating costs for
mining are based on quotes from mining contractors in
Mining Operating Costs
USD$ 22.5 / tonne
Concentrator Operating
Costs USD$ 9.9 / tonne
Mine Administration USD$
3.2 / tonne
The direct cash operating
costs for the Project average USD$ 2.50 per lb of payable Ni in concentrate. By-product
credits are anticipated to be in excess of USD$ 0.40 per lb of Ni in
concentrate. This cost profile indicates Munali will be a low cost producer of
nickel.
Project Funding:
The Munali project is
funded by a mix of debt and equity as
follows:
Equity
funding: USD$ 35 million has been raised from Albidon shareholders (October
2006) and USD$ 5 million from Jinchuan Group as part of the Off take Agreement.
Debt
Financing: USD$ 60 million of senior debt will be provided by the European
Investment Bank and Barclays Bank as joint lead arrangers for the project, and
Jinchuan Group will provide an additional USD$ 20 million in subordinated debt.
Project Implementation:
The indicative schedule
for Project Implementation at
Surface earthworks
commenced fourth quarter of 2006
Engineering, design and
procurement third quarter 2006 to second quarter 2007
Supply of equipment and
fabrication first quarter 2007 to first quarter 2008
Installation:
Process plant second
quarter 2007 to second quarter 2008
Infrastructure fourth
quarter 2006 to first quarter 2008
Commissioning second
quarter 2008
Exploration For
Additional Nickel Resources At Munali:
In
addition to the resource drilling at
These
target areas are still being evaluated as a possible additional ore source for
expansion of the 900,000tpa concentrator designed for the
The
geological setting of the mineralization intersected along the southwestern
side of the Munali Intrusion is consistent with the same controls on nickel
sulphides over the entire length of the intrusion (over 2.5km).
Drilling
programs will continue throughout 2007 with the objective of testing these and
other prospects as potential sources of additional ore for the Munali plant.
FACILITIES
The Company has the
following facilities :
Office
premises located at the heading address as well as site office at the Munali
Nickel Mine situated approximately 60km south of
The Munali Nickel Mine is
wholly owned by Albidon Ltd of
SPECIAL NOTE
The
address provided by you,
The
telephone number provided by you (61 8) 9211 4600 applies to subject parent
company's telephone number in
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)