12th Jan 2015 11:38
LONDON (Alliance News) - African Minerals Ltd Monday said Shandong Iron and Steel Group, its partner in the Tonkolli iron ore project in Sierra Leone, has agreed to release USD13 million from the project's restricted bank account whilst the pair continue discussions in regards to funding for the project.
In December, African Minerals shares were suspended from trading after it placed the Tonkolli iron ore project on care and maintenance due to a lack of working capital and weak iron ore prices. The company said the project could not resume until USD102 million in restricted cash was released or it sourced additional funding from elsewhere.
In August, African Minerals entered into an agreement with Shandong to allow the company to access USD284 million that had been earmarked for the second phase of expansion at the project, but African Minerals had to split the project companies financially and operationally from itself as part of the deal.
The agreement allowed both companies to access the funds that were held in a joint Hong Kong account for construction capital and for general working purposes.
The company said it has continued to engage with Shandong about the timing of the release of USD102 million in restricted cash it had previously agreed to release to African Minerals. Talks are ongoing, but Shandong has agreed to release USD13 million, which will be used to pay staff salaries for work completed in December and to pay accumulated taxes due in Sierra Leone, said African Minerals.
Shandong has a 25% stake in the Tonkolli project, with African Minerals owning the remaining 75%.
African Minerals remain committed to concluding the discussions with Shandong, which remain "the company's utmost priority", but warned there is no certainty that the remaining restricted funds will be released, it said in a statement.
African Minerals shares remain suspended and the project remains on care and maintenance until the company can find a funding solution.
By Joshua Warner; [email protected]; @JoshAlliance
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