On July 13, African Minerals Limited (AML), Channel Islands-based iron ore miner with significant iron ore and base metal interests in Sierra Leone, West Africa, announced that it has entered into a $1.5 billion binding memorandum of understanding with Chinese-based Shandong Iron & Steel Group Co. Limited (SISG) in respect of AML's flagship iron ore project at Tonkolili and the related infrastructure projects.
The latest deal involves a three-stage investment to takeover 25 percent of the project and an agreement for Shandong to buy 10 million mt of iron ore per year at discounted prices. The funding will enable AML to improve its strategic implementation of Phase I (output increased from 8 million mt per annum to 10 million mt, to be commissioned in Q4 2011) and Phase II (overall output increased to 25 million mt per annum, to be commissioned in Q4 2012) of the project, introduce an improved transport system compared to the originally planned one, implement the project at a faster pace and reduce operational costs. Extension of the rail system is expected to be completed by Q3 2011, enabling delivery of first ore to Pepel Port in Q4 2011.
In return for providing funding, SISG may elect at the closing of each stage of the funding, to receive either iron ore or a dividend if paid, in each case corresponding to SISG's percentage ownership of the project.
As SteelOrbis previously reported, in January this year AML inked a £167.8 million deal with gigantic steel trading company China Railway Materials Commercial Corporation to help fund the first stage of the Tonkolili project.