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Truck carrying iron ore from Marampa mine in Sierra Leone.
African Minerals (LON:AMI) chairman and founder Frank Timis has struck a $20 million deal to buy failed West African miner London Mining’s (LON:LOND) iron ore mine in Sierra Leone from administration through his private company.
Romanian businessman Frank Timis is set to rescue Sierra Leone’s iconic iron ore Marimpa mine.
The agreement between Timis Mining Corporation and Australia’s Cape Lambert Resources will help Timis to fund the purchase of the Marampa mine, which employs 1,400 people in the West African country and has iron ore reserves expected to support production for the next 40 years.
The news come as London Mining shares have collapsed in recent weeks after failing to find a buyer for the business, which the miner was hoping to sale as a way to pay mounting debts following a slump in iron ore prices.
Sierra Leone’s finance minister Kaifala Marah flew to London on the weekend to join emergency talks about the potential sale of Marampa mine, adjacent to Timis’ Tonkolili iron ore project.
Marampa is expected to produce 5 million to 7 million tons a year, which equates to an annual royalty of $10 million to $14 million, or as much as $56 million over the term of the deal, Cape Lambert Executive Chairman Tony Sage said in the statement.
The funding package takes the form of a 12-month $8 million loan and a $12 million royalty purchase, which gives Cape Lambert $2 for each metric ton of iron concentrate sold by the mine.
3 Comments
SeA
Hmmm, I wonder, if Ebola will go away now?
Fossil66
They can always do a Murdoch and automate production -don’t need any body at mine then!!!
Larry Southwick
Does one mine, three prospects, low prices and Ebola spell success?
An interesting buy, in many respects making a lot of sense for the company helping fund the purchase, Cape Lambert Resources. They own three iron ore mining prospects in Sierra Leon which form a belt extending half way across Sierra Leon with London Mining right in the center of it. London Mining’s Marampa Mine (not to be confused with one of the CLR mines located right next door and also called Marampa) is the only one with a developed and operating mine and shipping ore.
So with Timis CLR has gained a (potential) operator for its non-producing assets, but same operator will first have to make the changes that will spell “money” for
the LM Marampa mine. In an Ebola-paralyzed piece of the world.
Much has to be done, renegotiating sales contracts, maintaining ore hauling and service contracts, completing mining and shipping improvements which LM felt were critical, and building an operating and management staff willing to work right now in Sierra Leon. Regarding the latter factor, at least one contractor had said it would no longer provide services, so LM was going to have to do that work themselves.
As commented earlier in discussing the interest by JSW Steel in this property, new ownership will at least maintain the mine as a viable asset. However, while JSW might have had a flexible schedule to resolve the operating, economic and Ebola issues, Timis has a timetable of royalty payments to CLR which begin in three months.
JSW seemed to have another advantage as well – for them the ore would have been outside the slam bang world of selling ore to China. LM’s ore haulers were all sailing for China. One supposes Timis will do so as well. Unless they have current customers with which they may also be able to work outside of that slam bang world.
All of the above I am sure Timis and CLR carefully considered, so it will be interesting to see what their solutions were and how they are played out.