London-listed, Africa-focused miner African Minerals has announced that it will put the Tonkolili iron ore mine in Sierra Leone on care and maintenance until such time as $102 million of restricted cash is released by its joint venture partner China-based Shandong Iron and Steel Group (SISG) or the company secures additional short-term funding.
African Minerals said that the controlled shutdown has been initiated at operations in Sierra Leone due to insufficient working capital, severely impacted by low iron ore prices, which has prevented implementation of cost reduction strategies.
"While the operating performance of the project has been impressive during 2014, with the third quarter exports of 4.4 million mt at an average direct cash cost of $36/mt, in spite of the wet season, the fall in iron ore prices and the operational challenges caused by the Ebola disease outbreak has meant the project has continued to operate at a loss," African Minerals CEO Alan Watling said.
As previously announced, African Minerals commenced a process to sell down a partial interest in its stake in the Tonkolili mine. The company is talking to several groups who have expressed strong interest, and discussions are being progressed as quickly as possible, though there is no certainty a transaction will be forthcoming.