3rd Nov 2014 12:41
LONDON (Alliance News) - African Minerals Ltd on Monday said it has entered into an agreement with Timis Corp Ltd, the vehicle controlled by its executive chairman, Frank Timis, to allow the company access to its port and rail infrastructure, after Timis acquired the Sierra Leone mining assets of the collapsed London Mining PLC.
African Minerals said it decided in October not to enter talks to buy London Mining's Marampa mine, and, following that decision, formally allowed Timis to enter the talks with London Mining administrator PwC to buy it instead.
On October 24, PwC said it had agreed terms with Timis on the sale of the Marampa mine.
London Mining, confirming the sale of the assets to Timis Monday, said the deal had been done under a 'pre-pack' structure, meaning some creditors of the company will take losses on their indebtedness.
London Mining said that without Timis taking over the assets, the mine was hours away from closing, which would have resulted in greater losses for stakeholders, including the local community. Commenting on the deal, PwC's Peter Dickens said the mine contributes around 10% of Sierra Leone's GDP.
Under the terms of the deal between African Minerals and Timis, the pair have negotiated commercial access terms to African Minerals' rail and port infrastructure, owned by its African Railway and Port Services subsidiary.
African Minerals said any commercial terms agreed between it and Timis would be on an arms-length basis and will be accretive to African Minerals.
The pair have also entered an agreement to undertake studies regarding the possibility of blending products from Marampa and African Minerals' Tonkolili mine to the mutual advantage of both companies.
"It is very pleasing to see that the Marampa Mine will continue to be a major source of employment in Sierra Leone. The quick resolution by the administrators and Timis Corp Ltd has prevented the closure of an important asset for the local and national community," said Alan Watling, chief executive officer of African Minerals.
London Mining collapsed into administration in October after longer-than-expected negotiations between its senior lenders and potential buyers of Marampa, along with a lack of liquidity caused by falling iron ore prices and the impact of the Ebola virus outbreak on Sierra Leone.
African Minerals shares were up 5% to 15.75 pence on Monday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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