London AIM-listed miner Premier African Minerals completed its acquisition of a majority stake in private Mozambique company TCT Indústrias Florestais (TCT IF) at the very end of last month. Premier now owns 52% of the Mozambique enterprise.
It did so by buying 26% of the interests in TCT IF of each of the two partner companies that owned the business, namely Transport Commodity Trading Mozambique (TCTM) and GAPI Sociedade de Investimentos.
The acquisition was announced by Premier in late April and, with the fulfilment of the conditions precedent, the deal was completed. The total cost of the purchase was $2.1-million. Of this, $1.1-million, payable in five tranches, goes to TCTM, while GAPI receives $1-million, either in new Premier ordinary shares or cash (as GAPI decided), also in five tranches.
Although Premier receives an operational natural resources company with a 24 821 ha hardwood forestry concesision in the central region of the country and associated furniture and semi- finished goods manufacturing and export operations, the key attraction for the miner is a 27 km2 limestone exploration licence held by TCT IF.
“This is a unique opportunity to acquire a deposit that has very good prospects for development into a major low-cost industrial-scale mining operation with essential infrastructure already in place and a cash generative business to help finance the development,” affirmed Premier CEO George Roach in a press release.
“The forestry operations of TCT IF will benefit immediately from limited support that Premier has already provided in the form of essential consumables, as much as from expansion of export opportunities, in addition to existing markets in the UK and the Southern African Development Community region.”
The limestone exploration licence was granted to TCT IF in January and is valid for two years. It can be renewed for another two years. There is an approved exploration programme, with a budget of $200 000. The company’s forestry concession has another ten years to go and can be renewed for a further 50 years. The forestry concession allows TCT IF to cut up to 3 000 m3 of wood a year, excluding dead wood. The company also operates a tourist lodge and a 9 963 ha game farm with a hunting concession, valid to 2065. The timber operation could bring in gross revenues of $1.5-million a year, compared with concession operating costs of less than $750 000. TCT IF is a self-sustaining operation which will beneficially contribute to the miner’s cash flows next year.
Preliminary research by Premier indicates that the limestone grades are suitable for use in cement, agrilime and aggregates production. In addition, there is a local market for this limestone in these and other applications.
The limestone is located some 20 km south west of the small town of Caia, in Sofala province. The exploration and exploitation of the deposit will be significantly aided by the existing timber extraction infrastructure. Further, the Sena railway line from Tete to Beria runs along the northern edge of the concession, where there also is a small railway yard with three sidings.
Premier is also active in Benin, Togo and Zimbabwe. Further, it has small shareholdings in miners operating in Ethiopia and the Democratic Republic of Congo.