African Minerals signs revised MOU with Chinese partners

Finance

Publishing Date: 03 May 2011 5:17pm GMT
Author: Mining Journal

African Minerals Ltd says it has signed a revised memorandum (MOU) of understanding with Shandong Iron & Steel Group Company Ltd (SISG) regarding the Chinese entity's proposed US$1.5 billion investment into the Tonkolili iron-ore project.

The new terms include a lump sum payment of the investment amount for 25% of the project. Previously the amount was to be split up into three separate payments.

In addition, regarding the offtake of product, SISG will have an option to acquire 25% of the annual production over the three production phases with reference to benchmark prices.

The previous MOU, announced in July last year, envisaged the right to offtake equal to the stake but at cost prices.

The revised MOU also envisages a separate iron-ore offtake agreement for total of 2Mt/y of Phase I production, and an incremental 8Mt/y after Phase II is commissioned, at a discount to benchmark prices. This will increase to 10Mt/y once phase three commences, for the remainder of the life of the project.

African Minerals says further progress has been made by SISG on the due diligence. The exclusivity period between the two parties expires at the end of May and “the parties are working to finalise the agreements by that time,” according to African Minerals.