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Tuesday, 28 September 2010 09:26

U.S. $1.5 Billion Tonkolili Deal Progresses, Experts in to Back AML

FREETOWN, Serria Leone, September 28, 2010 (Concord Times) - Large teams of both internal and independent experts from a number of technical disciplines have been visiting the African Minerals Limited, AML's flagship iron ore project at Tonkolili and related infrastructure as part of the process to complete $1.5 billion transaction.


It could be recalled that the Regulatory News Service (RNS) on July 13, 2010 announced that the strategic binding memorandum of understanding (MoU), in respect of the Tonkolili flagship iron ore project between AML and Shandong Iron & Steel Group Co Limited (SISG) has raised its stake to US$6 billion.


The iron ore project development company that is developing the Tonkolili project in Sierra Leone, West Africa, noted that due diligence by SISG is progressing well, albeit somewhat slower than planned due to the logistical issues of coordinating the due diligence process between China, Europe and Sierra Leone.


The extent of due diligence is "required given the size of the ore body and the fact that large teams of both internal and independent experts from a number of technical disciplines have been visiting the project to undertake due diligence on the rail and port infrastructure and on the mine at Tonkolili."


In a recent statement the company assured that: "Both parties continue to work towards the completion of the transaction and are currently completing negotiations regarding a small number of amendments to the Memorandum of Understanding (MoU) for Shandong's $1.5bn investment in the Tonkolili project and the long term iron ore off-take agreement, including revisions to the expected timing of signing and completion. The Company will provide a further update shortly."


While the 3-stage investment of US$1.5 billion for approximately 25% of the Project values the Project at US$6Bn, it should be noted that the venture is accompanied by an off-take agreement for a total of up to 10 million tons per annum to boost the strategic implementation of Phase I and II of the Project.


According to RNS announcement the transaction "will allow introduction of an all-rail transport and logistics solution instead of the originally intended combined haul road and rail system, allowing uninterrupted year-round shipment, unaffected by the wet season; improve operational efficiency and speed to completion of Phase II and reduce overall operating costs."


Commenting on the investment, Frank Timis, Executive Chairman of AML said: "African Minerals welcomes the investment of SISG, one of the world's largest steel mills. When completed, this strategic investment will enable us to accelerate the development of Tonkolili. Our partnership provides African Minerals' shareholders with significant funding for the project, accelerating its delivery, and it provides SISG with a long term supply of iron ore and a 25% interest in what we believe is a world class project that has many opportunities for future expansion. The new partnership will also bring great benefits to our hosts, the people of Sierra Leone."



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