Ann: Cape Lambert US$20M Funding Agreement to Timis Mining Corp, page-51

From The Australian today. I assume that picking up London Minings assets without the debt and consolidating production from the mines will drive down costs to make them more competitive at the lower price, at least that is probably the plan. Suspect no other bidders will arise as Timis is best placed to consolidate and produce on scale.

TONY Sage’s Cape Lambert Resources confirmed it would contribute $US20 million ($22.8m) into a proposal to resurrect the Marampa iron ore mine in Ebola-affected Sierra Leone. As foreshadowed by The Australian yesterday, Cape Lambert will purchase a royalty of $US2 a tonne of iron produced out of Marampa over four years. The owner of Marampa, London Mining, collapsed into administration last week after it was unable to manage its debts amid low iron ore prices and the Ebola outbreak that crippled the West African nation. Cape Lambert’s $US20m contribution, which will also include an $US8m bridging loan, would see it partner with Frank Timis’s Timis Mining. The funding is conditional on Timis Mining succeeding in its talks with administrators over a potential purchase of Marampa. Cape Lambert already holds a package of licences around the Marampa mine, and as part of the new deal has agreed to allow Timis Mining to mine material from those tenements in return for $US3-$US5 a tonne. With the Marampa mine expected to support between five million and seven million tonnes a year of iron ore production, Mr Sage said the royalty could be worth up to $US56m over four years. In addition, the agreement to sell ore from Cape Lambert’s licences around Marampa could secure the group between $US300m and $US500m over the life of mine. Mr Sage, owner of the Perth Glory A-League soccer club, is a long-time friend and business associate of Mr Timis, who is the executive chairman of London-listed African Minerals, which operates the Tonkolili iron ore mine to the east of Marampa. West Africa’s fledgling iron ore mining industry has been hit hard by the sharp 40 per cent drop in iron ore prices this year. The squeeze on margins has been further complicated by the outbreak of Ebola, which has prompted most western companies in the region to withdraw their expat workers. African Minerals and fellow West African iron ore miner Bellzone Resources have seen their share prices plummet by about 90 per cent this year on the back of the issues. The Marampa mine employs 1400 people and has sufficient resources to support 40 years of production. Shares in Cape Lambert closed 14.1 per cent higher at 10.5c.