Severstal to increase shareholding in Putu iron ore project

Russian steelmaker Severstal has announced that its indirect subsidiary Lybica Holdings B.V. (Lybica) has entered into a legally binding heads of terms agreement with British mineral exploration and development company Afferro Mining Inc. and its wholly owned subsidiary Mano River Iron Ore Holdings Limited to acquire a 38.5 percent interest in the Putu iron ore project in Liberia. Severstal currently holds the remaining 61.5 percent interest in Putu.
 
According to the agreement, Afferro will receive a cash payment of $65 million on completion of a definitive sale and purchase agreement on February 28, 2012 at the latest.
 
Afferro has also a right to ask for a deferred payment of $50 million in cash. Afferro plans to use the funds to accelerate its development strategy for its wholly owned Nkout iron ore project in Cameroon.
 
Both parties intend to enter into the sale and purchase agreement by December 23, 2011. The transaction will be subject to the approval of shareholders of Afferro Mining Inc. and regulatory consents.