PERTH (miningweekly.com) – China’s Shandong Iron & Steel Group (SISG) has completed a $1.5-billion acquisition of a 25% stake in Aim-listed African Minerals’ Tonkolili iron-ore project, in Sierra Leone.
The investment included certain discounted offtake arrangements for iron-ore produced at the Tonkolili mine, which would see SISG purchase two-million tons a year during the first phase of the operation, increasing to ten-million tons a year, at discounted rates of between 0% and 15%.
SISG would also have the right to elect to receive 25% of standard production at benchmark prices, and would receive iron-ore settlements of any declared dividends from the project.
African Minerals chairperson Frank Timis said that the company was pleased to welcome SISG as a strategic investor in the project, adding that SISG’s due diligence validated the scale and scope of the project, and secured the funding which would enable African Minerals to accelerate the development of the second phase of the project.
ASX-listed Cape Lambert Resources, in which African Minerals holds a major shareholding, welcomed the transaction.
Cape Lambert executive chairperson Tony Sage said the finalisation of the agreement was a significant development for Sierra Leone, its iron-ore mining industry, and African Minerals.
“For a long time now I have been stating that I believe that West Africa will be the next Pilbara amongst iron-ore-producing regions and the success of the Tonkolili project and the benefits its development and associated infrastructure brings to Sierra Leone will provide added impetus to developments such as our Marampa project,” said Sage.
The Tonkolili project is almost directly to the east of Cape Lambert’s Marampa project, which currently has a 680-million-ton Joint Ore Reserves Committee-compliant mineral resource.