Just a bit of follow up on the two groups looking to take over Afferro.
AIOG and IMIC to acquire,finance and develope iron ore mining and related infrastructure projects in Africa. AIOG through its extensive regional expertise,government relationships and strategic alliances,will take the lead in developing iron ore mining related infrastructure solutions.It is IMIC's intention to acquire strategic stakes in iron ore mining projects and companies in order to benefit from the significant value creation unlocked when these projects secure infrastructure solutions that will enable their commercial development into producing assets.
AIOG will be seeking to fund the projects through its strategic partners.
INIC will provide working capital on a commercial basis to project vehicles to assist with funding development costs,which may include pre-feasibility and feasibility studied,associated with the projects in which it invests.The amount to be loaned will be agreed by the IMIC board.
IMIC will be entitled to cost recoveryon any monies lent to either AIOG or the project SPV at the rate of 25% per annum interest which,at IMIC's option,can be converted into equity in the project SPV;and
IMIC has been granted an option to acquire up to the remaining 90% of AIOG in 2017.
They want to control 100Mt in the next five years.
AIOG believes it can deliver a win-win solution to key stakeholders,miners,African governments and China Inc.
China Inc will be able to secure a new source of iron ore supply,which will be transported via Chinese constructed infrastructure.
The four clusters of iron ore districts in Central West Africa are said to contain a vast potential that is conservatively estimated to approach 50 Billion tonnes of exploitable resources. This number is estimated to reflect only 20% of the identified iron ore deposits in West and Central Africa as a whole.
China to secure a new source of iron ore supply through the partnering of Chinese companies with AIOG to finance and construct relevent mining related infrastructure,such as rail,port,electric power and water-treatment facilities. The repayment for these may be done through dedicated long term supplies of iron ore to Chinese steelmakers fulfilling one of the key criteria of China's current five year national development plan.
Contraversy hits the West African nation's bid to unlock riches as The Sunday Times uncovers details of more questionable contracts. July 22nd 2012.
Agreements struck without Conde's knowledge that gave shadowy middlemen rights to billions of pounds of mining assets if the government defaulted on a loan of only $25 Million dollars. The World Bank opened an investigation,Conde cancelled the loan - and called Tony Blair for advice.
Yet even as that contraversy has begun to subside,The Sunday Times has uncovered details of other questionable contracts. One is with an obscure Chinese trading firm,the other with a tiny London-listed Shell company. Both companies are trying to lever their way into Guinea's crown jewel: Simandou,the $20 Billion iron ore project. Analysts estimate it could generate $140 Billion in Royalties over the next 25 years.
China International Fund (CIF)was set up by a syndicate of Hong Kong traders and Sonangol,Angola's state oil monopoly. The Group is highly secritive.
The group agreed in February last year to provide $100m in budgetry support,$40m in riceplus buses and fuel. The document,which has never before been disclosed,will raise eyebrows because six months after it was drafted,CIF made its move on Simandou.
Rio Tinto had 50% of the Simandou tenemnt taken from it and handed over to Beny Steinmetz,the Israeli diamond tycoon. Rio had to pay the government $700m in March last year to regain the other 50%. Five months later,CIF attempted to convince the government to give it the rights to Rio Tinto's concession.
AIOG has revealed a "strategic partnership" with four different Chinese railway and project managers to build and finance the project. Th deals caused outrage. Conde's political rivals accused his administration of giving away a hugely valuable piece of infrastructure to AIOG,which appears have done little more than act as a go-between for the Chinese.
These are the people who are looking to take over Afferro and build the SDL Permitted Infrastructure in a reverse take over of Afferro.
Sundance and Afferro beware who you deal with,once bitten twice shy.
Regards Westcott.
SDL Price at posting:
10.2¢ Sentiment: None Disclosure: Held
