Sierra Leone News: New Chinese investor buys 16.5% into African Minerals

Tianjin Materials and Equipment Group Corporation (Tewoo) has signed a Memorandum of Understanding for a 16.5% stake into Sierra Leone’s iron ore miner, African Minerals Limited (AML).
The investment announced last week is in two stages. In the first stage Tewoo will buy a 10% stake in AML for US$390million. Secondly it will buy 10% of the Tonkolili project for another US$600million.
This will allow the Chinese to buy ore from the mine for 20 years, and according to the agreement Tewoo can buy up to 10million tonnes of iron ore.
Further, African Minerals would also form a joint venture with Tewoo to investigate the development, construction and operation of a blending facility at Tianjin port, with a view to souring, blending, marketing and selling blended products into China.
Both boards of the two companies have approved the investment and AML’s Executive Chairman Frank Timis reacted thus:”African Minerals is delighted with Tewoo’s intended investment at both the AML and operating company levels. With AML’s history of successful relations with Chinese industrial entities, I am confident that this transaction will be successfully completed.”
In March 2012 China’s Shandong Iron & Steel Group (SISG) completed a $1.5-billion acquisition of a 25% stake in AML’s Tonkolili iron-ore project, in Sierra Leone. Timis added, “Tewoo’s partnership will also provide additional guaranteed long-term offtake for our product. With Tewoo, China’s Shandong Iron & Steel Group (SISG) and China Railway Materials (CRM) as our long-term offtake partners, we will have almost all of the Tonkolili project’s production committed for the next 20 years,”
The investment is now subject to due diligence and regulatory approvals, and both parties would seek to close the transaction by December 31.
AML last month reported interim earnings of US$99mln, off revenues of US$405mln, and a comprehensive loss of US$18mln.
Friday October 04, 2013