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ENRC acquisitions

Publishing Date
19 Oct 2010 10:02am GMT
Mining Journal

Eurasian Natural Resources Corp (ENRC) has expanded its iron-ore resource base in Brazil with completion of the purchase of Mineração Minas Bahia SA. ENRC announced a month ago that it was acquiring the remaining 50% stake in the Brazilian iron-ore joint venture from partner Zamin Ferrous.

The Kazakh-based company will make an initial payment of US$167.5 million, followed by installment payments of another US$167.5 million and then US$335 million. ENRC paid US$306 million in mid-2008 for its initial 50% stake.

ENRC also announced this week that it is to acquire control of Mineração Peixe Bravo SA (MPB) by subscribing for new common shares representing 51% of the enlarged share capital.

MPB's assets include a number of exploration licences, primarily for iron ore, granted by the National Department of Mineral Production in the north of Minas Gerais. Following the acquisition, ENRC has agreed to fund, by way of loans, the costs relating to the drilling and geological research programme for certain areas for which MPB holds mining rights, up to a maximum of US$10 million.

The combined acquisitions and related deals have a total initial cash consideration of up to US$304 million, payable from ENRC’s existing cash resources.

ENRC said that the transaction enhances its access to the seaborne market, which offers "an attractive investment opportunity, particularly in view of the continued outlook for growth in the demand for high quality iron-ore products".

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