Nickel producer Bindura Nickel Corporation says the courts are yet to finalize the resolution to its US$14 million tax dispute with the Zimbabwe Revenue Authority (ZIMRA).

Last year BNC said it was involved in a tax dispute with the tax authorities amounting, initially, to US$29 million emanating from assessments the national tax collector issued in February of that year.

The assessments basically related to historical issues pertaining to how the company was structured years ago, and issues arising from differences in the interpretation of standard commercial agreements in the mining industry.

In the group’s latest financials, chairman Muchadeyi Masunda said the issue is yet to be resolved.

“For the outstanding amount, both parties agreed to declare a dispute and pursue the matter through the
courts.

“The matter is now before the courts pending hearing. Except for this disclosure, no provision has been made in this year’s financial statements with respect of this contingent liability,” said Masunda.

“Based on legal advice received to date, the Company has acted within the statutes of the law. The Directors are still of the view that a positive resolution will be reached.

“At the time of reporting, the company could not reasonably estimate the likely timing of resolution of the matter.”

Meanwhile, BNC’s turnover for the year to March 31, 2020 amounted to US$52.4 million, 1 percent lower than the US$54 million realised in the comparative period last year, which was “in sync with the decrease in sales tonnage referred to above.”

Cost of sales decreased by 7 percent from US$40.3 million last year to US$37.7 million in the year under review, mainly due to lower production.

Gross profit increased by 7 percent from US$13.7 million in the comparative period last year to US$14.7 million, which was largely ” a reflection of the corresponding decrease in the cost of sales.”

However operating profit decreased by 86 percent to US$2.8 million, compared to the prior year’s achievement of US$20.2 million.

“This profit erosion was mainly attributable to reduction in the net foreign exchange gains recognised on the introduction of the Zimbabwean dollar in the prior year amounting to US$17 million, versus US$0.5 million realised in the year under review.

“However, profit and total comprehensive income of US0.9 million, was higher than prior year restated amount due to a prior period error adjustment,” reported the group.

The group’s output figures showed that ore milled in the year under review was 434 077 tonnes, compared to 443 876 tonnes milled in the same period previously.

“The 2 percent decrease was due to a decrease in grade. Head grade was 1.53 percent versus 1.64 percent in the same period last year.

“The decrease in grade was due to an increase in the mining of disseminated ore as opposed to massives, following the investment in new mining equipment.”

“Recovery remained constant at 86.3 percent, year-on-year. The nickel production of 5 720 tonnes was 9 percent lower than last year’s output of 6 289 tonnes due to the lower ore grade and lower milled tonnage achieved respectively year-on-year.”

The all-in sustaining cost of producing nickel in concentrate increased from US$6 610 per tonne in the prior year to US$7 606 per tonne.

This was due to the decrease in production as well as the incessant
increase in the prices of local inputs, which was fuelled by the sourcing of scarce foreign currency on the parallel market by local suppliers for the importation of inputs.