African Minerals Limited

African Minerals Limited

Completion of Phase 1 Funding

  • Successful marketing of Loan Facility with in excess of US$370m of commitments received
  • Commitments received to date, coupled with existing resources, expected to provide sufficient funding to reach Phase 1 production
  • CRM notifies the Company of its intention to exercise its rights to maintain its 12.5% shareholding (subject to governmental approvals)


African Minerals Limited, the iron ore project development company that is developing the Tonkolili project in Sierra Leone, West Africa is pleased to announce a successful outcome of the marketing of its secured loan facility announced on 11 November 2010 with commitments received for in excess of US$370m to date (of which approximately 10% remains subject to Canadian regulatory approval).

The terms of the debt financing to the Company remain substantially the same as previously published, with the differences between the terms announced on 11 November 2010 and the terms as at 1 December 2010 set out in Schedule 1 of this announcement.  Revised Related Party disclosures in respect of Dundee Corporation are attached as Schedule 2 to this announcement.  It is expected that the closing of the Facility will occur on or about 31 December 2010 and is subject to certain conditions precedent including negotiation and execution of definitive transaction documentation and security arrangements. The revised term sheet for the Facility is attached as Schedule 3 to this announcement. The Company retains the option to receive further commitments until closing up to the maximum facility amount of US$500m.

Additionally, under the terms of China Railway Materials Commercial Corporation’s (“CRM”) equity subscription completed in June 2010, in which CRM acquired 12.5% of the issued share capital of AML, CRM was granted certain pre-emption rights. These rights entitle CRM to maintain its existing percentage shareholding in AML in respect of new equity issues by AML on the same terms as those new equity issues (including as to price). AML has offered CRM the right to subscribe for new common shares until 13 January 2011, at the Placing Price of 425p, and if exercised would (subject to exchange rate) provide an additional funding of approximately US$45m. CRM has notified AML of its intention to exercise this right subject to receiving the requisite governmental approvals.

The Company believes that, based on the commitments received, following the closing of this Facility it will have sufficient funds in place to reach production under its Phase I development programme. This programme is designed to deliver a production capability of 12Mtpa of Direct Shipping Ore as lump and sinter fines with a grade in excess of 58% Fe, with the first ore expected to be loaded onto ship for export in Q4 2011. Phase I operating costs are presently estimated by the Company to be approximately US$27.50 per tonne.

Progress towards Phase 1 production is accelerating, with the recent awarding of contracts of in excess of US$270m, including the selection and commissioning of BCM Group as mining contractor and China Civil Engineering Construction Corporation (“CCECC”) for the laying of the new rail track.

Commenting on the  Facility, Executive Chairman, Frank Timis, said “with these commitments we are now well positioned to fund independently the successful completion of Phase I of our flagship Tonkolili project, and to take advantage of the strong iron ore pricing environment, for the benefit of all stakeholders – our shareholders, our partners, the Government and people of Sierra Leone”.

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