AML secures $1.5 billion funding from China for Tonkolili iron-ore project

AIM-listed miner African Minerals Limited (AML), yesterday finalised its second financing deal for its flagship Tonkolili iron-ore project in Sierra Leone, when China's state-owned Shandong Iron and Steel Group (SISG) agreed to take a 25-per cent stake in the project for $1.5 billion.

The Tonkolili iron-ore deposits, holds an estimated 10.5 billion tonnes of high grade iron ore and requires an investment of nearly $1 billion in the second phase to raise the annual iron ore production to 45 million tonnes and an additional $4 billion to raise it to 75 million tonnes eventually.

The Tonkolili iron ore is of high grade and is upgradeable to a high 70.3-per cent concentrate at a mass recovery of 26.5 per cent.

SISG, China's sixth-largest mill signed a memorandum of understanding with AML for taking a 25-per cent stake for a three-stage $1.5 billion investment in Tonkolili iron-ore project, valuing Tonkolili at $6 billion.

In the first-stage funding, SISG will pay $800-million in cash to African Minerals by the end of September 2010, after which, the schedule for further cash funding would be determined by both companies.

The funds from SISG will be used by African Minerals to develop the high grade iron ore deposits at Tonkolili, to develop a logistics system and construct a 122-km rail line from the project site to Lunsar port for exporting the iron ore.