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Whilst the railway is an important factor in this scenario,...

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Lagoz

209 Posts.

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20/12/14

07:01

Post #: 14490462
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Originally posted by eldruku ↑

YES, Timis can dig up CFE Marampa ore ship it down the line to Port Pepel. In fact, that is exactly what has been agreed upon (100 million tonne lease to Timmis Mining Corp for $3-$5/tonne).

It still comes down to the infrastructure though. If Timmis can't move our ore, he won't. Now unlike his own rail deal with AML (which is short term 3 months), CFE has a rail deal with AML that was formed last year and is long term (many years)......but....if AML go into administration, then all bets are off anyway and a new deal with the administrators will need to be formed (which may not be a bad thing anyway).

Timmis is the central figure in all of this. He is the chairman of AML, is a substantial shareholder and therefore has a major interest in Tonkalili mine and the rail infrastructure. He also now owns Londons' Marampa mine via his other company TMC, which needs a rail line to get its ore to port. To top it off, he has the exclusive lease on the CFE Marampa mine which also needs a rail line to move its ore.

What he doesn't have, is the money to keep AML and the Tonkalili mine ticking over but the Chinese (SSIG) who have already pumped huge dollars into AML do. SSIG quite rightly have the shits with Timmis because they essentially paid for the railway that Timmis is now using to make his otherwise completely uneconomical mines, economical.

The Chinese are between a rock and a hard place because they either have to let the investment go, write off half a billion dollars and live with the fact that Timmis will probably get access to the railway in the long term anyway...or.....cough up another half billion dollars, keep AML alive and honour the rail access deal with CFE, which will be utilised by Timmis!! On top of that, Timmis will want to work a deal for his London asset and won't play ball with the Chinese unless he gets that.

So the Chinese either write off the $$ or pay up and accept Timmis as 1. Chairman of their company, 2. Owner of competing mine and 3. Operator of another competing mine!!

Head spinning much??

My guess is that the deal will be done with Chinese at the expense of 25-50% of the Tonkalili asset. TMC will be a winner, CFE will be a winner and SSIG will win in the long run (decades). The losers are the shareholders of the London Mining Marampa asset (now owned by TMC) and the shareholders of AML who will see 25-50% of their asset sold off.

We should have a fair idea what will happen by Christmas.

Fascinating machinations.

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Whilst the railway is an important factor in this scenario, London Mining exported their ore by road to another port and, as far as I know, never used the African Minerals railway.
So even if the railways deal falls over, there is an alternative; albeit, probably not so financially attractive.

CFE Price at posting: 8.5¢ Sentiment: Hold Disclosure: Held
2 Upvote

0 Great analysis

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