African Minerals Founder Strikes Deal to Buy Marampa Mine from London Mining
African Minerals (LON:AMI) founder and chairman, Frank Timis, is one step closer to securing a deal to purchase London Mining’s (LON:LOND) Marampa iron ore mine in Sierra Leone.
The founder’s private company, Timis Mining Corp, is said to have secured $20 million in financial backing from Australia’s Cape Lambert Resources to acquire the mine, which toppled into administration last week after failing to find a buyer.
Funding for the acquisition will take the form of a 12-month $8 million loan and a $12 million royalty purchase, which gives Cape Lambert $2 for each ton of iron concentrate sold by the mine. The funding package is contingent upon Timis Mining securing the assets from the administrator.
Marampa, which employs around 1,300 people, is expected to produce approximately five million to seven million tons of iron ore a year. At this rate, the annual royalty for Cape Lambert is $10 million to $14 million or as much as $56 million over the term of the deal.
As London Mining’s only operating mine, Marampa reported a first-half loss due to slumping iron ore prices and the worst Ebola outbreak in history for Sierra Leone. The mine slipped into administration last week after it ran out of funds and failed to secure a buyer for the company.
The acquisition makes sense for African Minerals. The company’s Tonkolili project in Sierra Leone is about 120 kilometers from Marampa and is expected to enter into a joint venture with the mine.
According to Investec analysts, African Minerals seemed to be the natural acquirer for the Marampa mine, given its significant infrastructure in the region.
"... It is interesting that it is Timis' private company purportedly doing the bidding, perhaps because it can more readily realize the funding to make the offer.”
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.