African Minerals has received notification from China’s Shandong Iron and Steel Group that the relevant approval has now been received regarding its proposed $1.5 billion investment in African Minerals’ Tonkolili iron ore project.
The approval came from the China National Development and Reform Committee (NDRC), and African Minerals is expecting the remaining government approvals to follow shortly. The closure date for the transaction has now been extended until the end of March 2012.
Shandong Iron and Steel Group (SISG) has also confirmed that testing of a trial shipment has been successful and that Tonkilili’s iron ore is of sufficient quality to satisfy the condition precedent to closure of the transaction.
London, UK-based African Minerals is developing its Tonkolili iron ore project in Sierra Leone, which has a JORC-compliant resource of 12.8 billion tonnes. The project, which currently has a 60-plus year mine life, is being developed in three phases: Phase I of the project is fully funded and at full capacity is expected to produce 12 million tonnes of iron ore per annum once it ramps up from initial production in quarter four of 2011; and Phases II and III are expected to boost production incrementally by 23 million tonnes per annum and 45 million tonnes per annum respectively.
Frank Timis, executive chairman of African Minerals, commented: "NDRC approval together with the positive results from the testing of the trial shipment represents major progress towards completing the Shandong transaction. We very much look forward to our partnership with SISG and closing the transaction upon receipt of the final PRC approvals.
“Following the successful funding announced last week and the expected closing of the deal with SISG, AML is well positioned to complete Phase I, ramping up to 20 mtpa by the end of 2012, and to commence its Phase II expansion programme."
African Minerals and its contractors currently employ approximately 5,000 people in Sierra Leone, 78 per cent of whom are Sierra Leonean nationals.
SISG is one of the largest iron and steel groups in China, specialising in the smelting, processing and the sale of steel and related commodities. It is currently the world's ninth largest steel group.
