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FINANCING UPDATE
African Minerals Limited, the developer, operator and 75% owner of the Tonkolili Iron Ore Project in Sierra Leone, has updated investors on financing.
Trading of the Company’s ordinary shares was suspended at 7:55a.m. this morning, pending a further announcement by the Company.
As previously announced on 12 November 2014, the Company continues to engage with Shandong Iron and Steel Group over the timing of the release of restricted cash of $102m. SISG had previously agreed to the release of this restricted cash in August 2014, but since that time, SISG’s authorisation has not been forthcoming. Despite the Company’s best efforts to reach an agreement with SISG over the release of these funds, there remains no certainty on the timing of their release.
In the meantime, the Company has been progressing negotiations for alternative funding to finance working capital until the Project becomes cash flow positive. Despite intensive efforts, in the last few days it has become increasingly apparent that alternative sources of funding are unlikely to materialise in the near future.
In the absence of the release of the restricted cash or availability of alternative sources of funding, in order to address the immediate liquidity issues which the Project currently faces, the Company is seeking to engage with SISG and other parties over a partial disposal of its holding in the Tonkolili mine for a fair market value. Such a disposal may result in release of the restricted cash by SISG and/or allow AML to inject additional funds into the Project, as well as potentially strengthening the Company’s own financial position.
Furthermore, Standard Chartered Bank had been mandated by the Project to structure a new debt facility. Since the announcement on 12 November 2014, due to a further deterioration in market conditions, the Company and Standard Chartered Bank have reached a view that any structuring of a new debt facility is not currently possible.
There can be no certainty that any partial disposal of the Company’s interest in the Tonkolili mine will materialise, and even if concluded, there is no certainty of the timing or financial outcome of such a transaction.
The Company’s ordinary shares will remain suspended pending clarification of the Company’s financial position.
