TIDMAMI
RNS Number : 9161V
African Minerals Ltd
03 November 2014
03 November 2014
African Minerals Limited
("African Minerals", "AML", or "the Company")
Corporate Update
African Minerals, the developer and operator of the Tonkolili
iron ore mine in Sierra Leone, notes that Timis Corporation Limited
("Timis Corp"), a company established and wholly owned by AML's
Executive Chairman Frank Timis, has acquired the Sierra Leone
mining assets of London Mining from the administrator PwC, and
provides the following update.
Highlights
-- The Board of AML, after careful consideration, decided on 10
October 2014 not to enter discussions to acquire the assets of
London Mining in Sierra Leone given the potential impact on the
debt refinancing schedule that is currently underway with Standard
Chartered Bank, as communicated to the market on 30 September
2014
-- Following this decision, the Board of AML formally allowed
Frank Timis, acting in a personal capacity as Timis Corp, to enter
discussions for the acquisition if he so wished
-- It has been announced today that Timis Corp has successfully
acquired the Marampa Mine from the administrators, PwC
-- Timis Corp had previously informed AML that, if successful in
this acquisition, it would require Timis Corp and AML to negotiate
fair commercial access terms for AML's rail and port
infrastructure, owned by AML's subsidiary African Railway and Port
Services, or "ARPS"
-- At an AML Board meeting held on 24 October 2014, the Board of
AML approved Timis Corp's access to the ARPS rail and port
infrastructure for 6Mtpa of iron ore product, subject to completion
of commercial terms and any regulatory approvals, including the
requirements of the AIM Rules
-- Any commercial terms that may be agreed will be on an
arms-length basis, will reflect standard commercial terms in the
industry, will be accretive to AML, and will be fully assessed as a
Related Party Transaction in accordance with Rule 13 of the AIM
Rules
-- Furthermore, AML and Timis Corp have agreed to undertake
studies regarding the possibility of blending the products from
Marampa and Tonkolili, to mutual advantage, with a view to
accessing European steel making markets with a suitable quality
high grade product and to also capture the benefits of lower
freight rates.
Benefits to AML
Other than the implicit additional revenue through terms of any
access agreement, once agreed, AML is expected to be able to
benefit from the following:
-- reduced infrastructure operating costs per tonne, as a result
of a high fixed cost base benefiting from higher volumes
transported
-- the potential to blend Marampa's c65% Fe product with
Tonkolili's c58% Fe product to create a product grade that is
desirable in Europe, which would allow AML to benefit from
significantly lower freight rates (in October the average freight
differential benefit between China and Rotterdam from Pepel was
$12/t)
-- a potential significant premium in selling this European
blend grade compared to the current DSO (Current Platts 58% Fe
price is $67.50/t whereas Platts 62% Fe price is $80.00/t).
Alan Watling, CEO, African Minerals, said:
"It is very pleasing to see that the Marampa Mine will continue
to be a major source of employment in Sierra Leone. The quick
resolution by the administrators and Timis Corporation Limited has
prevented the closure of an important asset for the local and
national community.
African Minerals confirms it has agreed access for 6Mtpa to the
rail and port infrastructure by Timis Corp to unlock the synergies
between these assets, subject to the final negotiation of
commercial terms and receipt of necessary approvals. Given the
acknowledged related party nature of the transaction, those
negotiations will be done on a completely arms-length basis, will
reflect standard market pricing, and will be ratified in accordance
with Rule 13 of the AIM Rules.
It is expected that, subject to the agreement of commercial
terms, AML and ARPS will benefit substantially from lower
infrastructure costs by virtue of higher tonnage, as well as the
opportunities that will become possible through blending our
combined products, accessing new markets in Europe and reducing our
combined freight costs as a result, saving an estimated $12/t on
current prices.
The fact that Timis Corp has exclusive access to 100Mt of Cape
Lambert's adjacent weathered hematite material means that the
Marampa Mine will continue to be able to process a consistent
product for the next decade, continuing to provide additional
revenue to AML."
Contacts:
African Minerals Limited
+44 20 3435 7600
Mike Jones
Tavistock
+44 20 7920 3150
Jos Simson / Nuala Gallagher/ Mike Bartlett
Jefferies
+44 20 7029 8000
Nick Adams / Alex Collins
About African Minerals
African Minerals operates the Tonkolili Iron Ore Project (the
"Project") in Sierra Leone, with a JORC compliant resource of 12.8
Bt. The multi-generational Project is being developed in a number
of staged expansions. In 2013, African Minerals completed sales of
12.1 Mt to its customers. The current year sales guidance is for
16-18 Mt of exports.
Phase II expansion will see exports increase to 25 Mtpa, and
will incorporate production of a high grade concentrate product.
Concentrate production is expected to begin by the end of 2015 and
will eventually displace current DSO production as concentrate
volumes increase and the DSO resource depletes over time.
The Company has also developed significant port and rail
infrastructure to support the operation of the Project, via its
subsidiary African Rail and Port Services (SL) Limited ("ARPS"), in
which the Government of Sierra Leone ("GoSL") has a 10% free
carried interest.
The Project companies are currently owned 75% by AML, and 25% by
Shandong Iron and Steel Group ("SISG"), except for ARPS, which is
currently owned 75% by AML and 25% by SISG, with the GoSL having
the right to a 10% free carried interest from AML.
www.african-minerals.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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