African Minerals inks deal with China Railway Materials Commercial Corp for iron ore
African Minerals Ltd (AIM: AMI) (AML) said the mineral exploration and
development company with significant iron ore and base metal interests
in Sierra Leone, West Africa, said it has entered into a conditional
strategic agreement with state-owned China Railway Materials Commercial
Corp (CRM) in respect of AML's flagship iron ore project at Tonkolili
and the related infrastructure projects.
Subject to due
diligence by CRM, the parties expect to execute on or around March 31
2010 definitive agreements for long term iron ore off-take, an
investment by CRM in the company and the procurement of equipment and
services relating to the project.
CRM will enter into two
long-term off-take agreements with AML, both for a minimum of 20 years,
with an option to extend for a further five years, for iron ore
production from Tonkolili.
Under the off-take agreements, CRM
will purchase between five and eight million tonnes per annum of
hematite iron ore from AML's first stage of production at Tonkolili for
a minimum of 20 years, expected to commence by 2011.
The
Chinese group will also purchase a minimum of 10 million tonnes per
annum of magnetite iron ore production from AML's second stage of
production at Tonkolili for a minimum of 20 years, expected to commence
by 2013.
CRM will subscribe for approximately 30.5 million new
common shares of AML at £5.00 per share, for a cash consideration of
approximately £152.6 million representing 12.5 percent of the enlarged
issued share capital. The funds will provide the majority of the
funding expected to be required for AML's first phase of iron ore
production. CRM will be appointed to procure equipment and services for
the project.
AML CEO Alan Watling commented: “We expect that
this strong and strategic relationship with CRM will help underwrite
Tonkolili's start-up hematite production of up to 8 million tonnes per
annum by 2011. This, coupled with the parties' agreement to enter into
an off-take agreement for a further 10 million tonnes per annum of the
magnetite for a minimum of 20 years, should provide AML with a strong
foundation from which to secure its funds for its second phase of iron
ore production, targeting 45 million tonnes per annum."
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