AML seals $1.5b deal with Shandong
African Minerals Limited (AML) has finally sealed the long awaited $1.5 billion agreements with its Chinese counterpart, Shandong Iron & Steel Group Co. Ltd. (SISG), validating the scale, scope and accelerating the development of Phase II of its growth plans.
Commenting on the announcement, Frank Timis, Executive Chairman of AML said: “We are pleased to welcome SISG, one of the world’s largest steel producers, as a strategic investor in the Tonkolili project. This partnership confirms the potential for Sierra Leone to become one of the world’s major iron ore producing nations thereby creating lasting benefits for its people.”
The Iron ore giant is developing its Tonkolili iron ore project, north of the West African resource rich nation, with a JORC compliant resource deposit of 12.8 billion tonnes. The project, which currently has a 60+ year mine-life, is being developed in 3 phases.
According to a company announcement of August 1, 2011, SISG would invest the said amount in return for a 25% shareholding in the company’s world class flagship Tonkolili project and would also purchase iron ore under an off-take arrangement, guaranteeing long-term orders for Tonkolili’s production.
In real terms the Chinese investor, currently the world’s ninth largest steel group, would purchase 2 million tonnes per annum (Mtpa) of Phase I production, an incremental 8Mtpa after Phase II is commissioned and 10 Mtpa during Phase III, with discounts in each phase ranging from zero to 15%.
Mr Zou Zhongchen, Chairman of SISG said: “SISG is delighted to confirm this long term partnership with AML and to endorse a relationship with Sierra Leone which provides our steel mills with a sustainable long term supply of iron ore.”
Meanwhile, the terms of which are materially unchanged from those set out in the Company’s announcement of 3 May 2011, SISG has agreed to acquire a 25% shareholding in the mine, rail and port and power subsidiaries comprising the Tonkolili iron ore project for the above stated a cash consideration.
AML guarantees that the project subsidiaries will sell 10 million tons of iron ore, and reach an annual production rate of 12 million tons, during 2012.
Tanu Jalloh, Press & PR Officer, African Minerals (SL) Ltd.
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