TIDMAMI
RNS Number : 6477Z
African Minerals Ltd
12 December 2014
12 December 2014
African Minerals Limited
("African Minerals", "AML", or the "Company")
Temporary Marampa Access Agreement and Loan
African Minerals Limited, the developer, operator and 75% owner
of the Tonkolili Iron Ore Project in Sierra Leone, today announces
that, African Railway and Port Services (SL) Limited ("ARPS"), a
subsidiary of African Minerals, has entered into a temporary
infrastructure access arrangement with Timis Mining Corp (SL) Ltd
("TMC"). The temporary agreement consists of transportation
services for TMC's Marampa product using AML's rail and port
operations.
Prior to the temporary cessation of operations, announced on 1
December 2014, ARPS had been negotiating an interim infrastructure
access agreement with TMC. Given the change of operational and
financial circumstances, it is not appropriate to enter into this
arrangement, as it would not be possible for ARPS to deliver the
required services at this time.
Notwithstanding the temporary cessation of operations, the
Company has been in discussions with the Government of Sierra Leone
with regards to safeguarding employment. The Government consider
this essential, given the current challenges facing Sierra Leone
from Ebola, and wishes to ensure continuation of as many businesses
as possible, which supports local employment and tax revenues in
these difficult times.
Key terms of Temporary Access Arrangement
As such, the directors of the Company (other than Mr Frank
Timis) have approved the following temporary access arrangement
with TMC, which constitutes a related party transaction (TMC is a
related party within the meaning of the AIM Rules by virtue of Mr
Timis's shareholding in TMC and his position as Executive Chairman
of the Company):
-- ARPS will provide TMC with access to its rail and port
infrastructure and equipment to transport TMC product from a
temporary train loadout point, to and through the Pepel port.
-- ARPS will provide staff on a labour only basis to operate its railway and port facilities.
-- TMC will make arrangements direct with contractors for
equipment and services not provided by ARPS.
-- ARPS will charge TMC $100,000/month as an infrastructure
access fee, plus all labour at cost which is estimated to be
$370,000/month.
-- This arrangement will terminate automatically in the event of
resumption of normal operations (which would require negotiation
and approval of a new arrangement) and is subject to review after 3
months.
AML is of the view the temporary arrangement has little or no
risk for ARPS, and has the following significant benefits in the
current circumstances:
-- Full recovery of labour costs, and contribution to costs of
national staff who are in any event required to perform care and
maintenance activities;
-- Improved security of the assets through continuation of
visible activities over port and rail;
-- TMC arrangements with contractors allows those contractors to
keep equipment and staff on site, thus protecting the ability to
recommence operations quickly; and
-- Operation of mechanical assets assists with ongoing care and maintenance.
Alan Watling, Chief Executive Officer of African Minerals,
said:
"Reaching a temporary access agreement with Timis Mining
Corporation safeguards the continued operation of the Marampa mine
and maintains essential economic benefits in the region. This
temporary agreement will fall away on when operations are
resumed.
Whilst management continues every effort to secure funding to
resume operations, negotiations have not materially progressed
since our announcement of 1 December 2014. There remains no
certainty that a funding solution for the Company will be
forthcoming."
Loan from Timis Holdings Limited
Timis Holdings Limited (which is also a related party within the
meaning of the AIM Rules by virtue of Mr Timis's shareholding in
Timis Holdings Limited) has agreed to fund on behalf of the
Company, on an unsecured basis, up to $250,000 of professional
costs to be incurred by the Company's lawyers, Cleary Gottlieb
Steen & Hamilton LLP.
Contacts:
African Minerals Limited
+44 20 3435 7600
Matthew Hird / Francis O'Neill
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
12.8Bnt. The Project, which currently has a 60+ year mine-life, is
being developed in a number of staged expansions. In 2013, African
Minerals completed sales of 12.1Mt to its customers.
Phase II expansion contemplates the production of an expanded
tonnage including the establishment of a high grade concentrate
product with the project ramping up to 25Mtpa.
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
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