African Minerals completes Chinese funding deal for Tonkolili iron ore project.
Wednesday, Jun 16 2010 by Stockopedia News.
AFRICAN MINERALS LTD(LON:AMI) was boosted by news this morning that Chinese authorities had given the nod to a deal which will see China Railway Materials Commercial Corporation (CRM) inject GB167.8m into the company. Details of the deal first emerged in early April and involves CRM taking a 12.5% stake in African at GB5.00 per share. The new funding will be used by African for phase one of its iron ore production and infrastructure project at Tonkolili in Sierra leone, which is thought to be one of the world's largest reported JORC compliant magnetite iron ore mineral resources.
As part of the deal, CRM and African have also signed a 20 year guaranteed magnetite off-take agreement for minimum of 10 million tonnes per annum (Mtpa) of magnetite iron ore production from the second phase of commercial production at Tonkolili. CRM has an option to extend the magnetite off-take agreement for a further five years. The Chinese company also has the right to appoint a non-executive director to African's board.
Frank Timis, the executive chairman of African, said: " We are very pleased to welcome CRM as a shareholder in African Minerals and we look forward to welcoming them to the board of the company. CRM's involvement in the Company is a significant vote of confidence in the Tonkolili Iron Ore project and reinforces our relationship with China. The investment by CRM strengthens our ability to accelerate the development programme at Tonkolili as we look to start phase one hematite production in 2011 of 8 Mtpa. The equity raising, along with the guaranteed off-take agreement for a further 10 Mtpa of magnetite at benchmark prices, for a minimum of 20 years, secures the company's route to a commercial market in the Chinese steel industry. I have full confidence that the strong and experienced management team led by Alan Watling, our CEO, will advance the project through to our first phase of development and onto full production."
In February this year, African doubled the JORC compliant resource estimate for the Tonkolili project to 10.5bn tonnes.
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