4th Jun 2015 08:14
LONDON (Alliance News) - Sierra Rutile Ltd Thursday said it has struck a deal with emerging markets-focused agricultural company Carmanor Ltd under which Carmanor will help grow Sierra Rutile's African Lion agriculture subsidiary by funding an expansion of some operations in return for a stake in the unit.
In a deal that Sierra Rutile thinks will significantly accelerate the development of African Lion's palm oil, rubber and cacao operations, Carmanor will earn into the business by funding the expansion of African Lion's plantations over 2,500 hectares by the construction of an oil palm mini-mill.
Carmanor will take a 75% interest in African Lion if it successfully develops the business within a pre-defined timeline. If it fails to meet the obligations, Carmanor's stake in African Lion would fall to as low as zero, depending on the business plan obligations it did or didn't meet. Beyond 2,700 heactares, both Sierra Rutile and Carmanor would be required to fund their proportionate interests in African Lion or have their interests diluted.
Sierra Rutile will also continue to provide services like vegetation clearance and port access to African Lion on a cost basis, and both Sierra Rutile and Carmanor will coordinate and support each other on community and social initiatives in the region.
African Lion's pineapple plantations, which are already self-funding, are excluded from the deal and will remain fully owned by Sierra Rutile.
The deal means Sierra Rutile's agriculture projects will continue to advance with it having to make further cash contributions.
"I am very pleased to finalize this transaction with Carmanor as it allows Sierra Rutile to focus on our core mineral sands business, while retaining a meaningful, fully-funded interest in a broad-based agri-business. Carmanor is an ideal partner for Sierra Rutile due to their team's proven track record in sustainable community development and their existing operations in the Sierra Leonean agriculture sector," Sierra Rutile Chief Executive John Sisay said.
"We are pleased at the opportunity to further expand our presence in Sierra Leone, partnering with one of the country's most established businesses. The African Lion platform allows us to advance an accelerated business plan, building off the infrastructure Sierra Rutile already has in place and the plantations African Lion has already developed," Carmanor CEO Simon de Borchgrave added.
Sierra Rutile's main business is the production of rutile from mineral sands for the pigment industry and titanium metal production.
Sierra Rutile shares were down 0.4% at 29.38 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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