15th Aug 2014 16:49
LONDON (Alliance News) - African Minerals Ltd said Friday that it had entered an agreement with its project partner at the Tonkolili iron ore mine in Sierra Leone to access USD284 million in cash at the project level that had been earmarked for phase II expansion, but now has to separate the project companies financially and operationally as part of the deal.
In a statement, the company said it had agreed with Shandong Iron and Steel Group that both shareholders can access the funds in a Hong Kong joint project account for construction capital, and also for general working capital purposes, with immediate effect.
However, the condition for the release of the funds into the project companies was that they are separated operationally and financially from African Minerals Ltd.
It also said that Chief Executive Bernard Pryor has resigned, and will be succeeded by former Chief Executive Alan Watling, who retired in 2012. Watling will be CEO of African Minerals and the project companies.
African Minerals said it is evaluating its own longer-term financing needs.
"The company continues to evaluate opportunities regarding an optimum capital structure over the medium to longer term. The new management will also be reviewing and putting in place an appropriate longer term structure and funding for AML as the parent company, separate from the funding needs of the project companies," it said.
"In addition to reliance on up-streaming of dividends in due course, this will also involve raising shorter term funding to meet AML's commitments as they fall due," it added.
African Minerals said it has delayed finalising its interim accounts, which had been due to be released on August 21.
The company reiterated its guidance of 16-18 million tonnes per year for 2014, with cash costs in the range of USD34 to USD36 per tonne.
The company said that despite making good progress at the operations "the last few weeks have thrown up a perfect storm of low iron ore prices and heightened concern over the serious Ebola virus disease outbreak that is afflicting several countries in West Africa, amongst others."
It is confident it will establish its de-sliming circuits later in the quarter, which it said will provide an immediate uplift in its revenue and a marked reduction in its cash cost.
Shares in African Minerals closed up 7.4% at 35.25 pence Friday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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