JOHANNESBURG (miningweekly.com) – The International Mining and Infrastructure Corporation (IMIC) has made a conditional offer to acquire the entire issued and to-be-issued share capital of Cameroon-focused iron-ore exploration and development company Afferro Mining.

Under IMIC’s proposed offer, Afferro shareholders would be given three options for receiving consideration in respect of their shares – 80p in cash plus a convertible loan note of 20p, making a total of 100p a share; 50p in cash plus a convertible loan note of 70p, making a total of 120p a share; or shares in IMIC equivalent to a valuation of 140p for each Afferro share.

The cash portion in each of the options would be subject to a limit of $100-million, while the convertible loan notes would carry a coupon of 8%, rolled up and paid at the end of the 24-month duration of the loan notes or on conversion into IMIC shares.

Aim-listed IMIC had committed to providing written undertakings that the minimum $100-million cash was available to execute the proposal.

The mining investment group advised that further fundraising was planned at the time of IMIC's reverse takeover, which would provide the combined group with an appropriate level of cash to undertake the further development of Afferro’s 100%-owned Nkout, Ntem and Akonolinga iron-ore projects, as well as the 70%-held Ngoa project.

The potential offer was subject to a number of preconditions, including the successful raising of transaction finance, the completion of documentation required to enact a reverse takeover under the Aim rules for the London Stock Exchange and the negotiation of an arrangement agreement.

While Afferro CEO Luis da Silva did not believe that a decision could be taken by the company until a more formal offer and confirmation from IMIC's financial advisers was received, he was “encouraged” by the strong industry interest.

"The proposed IMIC offer is an endorsement of the strong progress we have made to develop a portfolio of strategically located iron-ore projects in Cameroon.

“Metallurgical testwork at Nkout has shown that a premium-quality concentrate can be produced at a lower cost than initially anticipated and, in addition, Nkout's resource can support a long mine life, highlighting the considerable value the Afferro team has been able to build,” he said.

Da Silva said the board would continue to investigate options as they were presented, but would be chiefly informed by the interests of it shareholders.

He believed that the IMIC offer should be viewed “positively”, particularly in respect of the Chinese consortium that IMIC had assembled to deal with the iron-ore infrastructure requirements of the Nkout project.

“We look forward to further information in the near term so that any eventual process may be further clarified,” he commented.

As such, Afferro had advised shareholders that no action should be taken at present, and that it would further update the market within 15 business days.