News

October 23, 2008

Mwana Africa Battens Down The Hatches And Cuts Spending, But Remains A Company With Plenty Of Value Inside It

By Alastair Ford

Some directors are better at keeping in touch with the markets than others. Oliver Baring, chairman of Mwana Africa, gets on the phone straight after an appointment with the dentist, and is happy to speak over the pain of a toothache. Of course, it could be argued that the pain caused by a trip to the dentist is mild compared to the pain being suffered by the Mwana Africa shareholders who bought in at 40p during the company’s fundraising over the summer. The company’s shares are now languishing at an astonishingly lowly 3.85p, a precipitous decline that has been driven in the main by the plunge in the nickel price and the ongoing uncertainty in Zimbabwe. There’s another reason for the decline too, but we’ll get onto that in a minute.

Mwana’s core asset is its 53 per cent stake in the Bindura nickel complex in Zimbabwe. It’s a peach of an asset to have at the heart of a small company under most normal circumstances. It’s one of Zimbabwe’s key economic assets, and as such gets preferential treatment when it comes to power and exchange controls. Its influence in the country stretches far and wide, and under the indomitable stewardship of Mwana’s chief executive Kalaa Mpinga, the operation has managed one way or another to keep...