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African Minerals Limited: Underwritten Cash Placing of £80 million

Friday, January 22nd, 2010

African Minerals Limited (AIM:AMI), the mineral exploration and development company with significant iron ore and base metal interests in Sierra Leone, West Africa, is pleased to announce that it has conditionally raised £80 million, gross, (approximately US$130 million) by way of a cash placing (the “Placing”) with institutional investors.
A total of 20,000,000 new common shares of the Company (the “New Shares”) will be underwritten at a price of 400 pence per share (the “Placing Price”).
In addition to the Placing and further to the conditional strategic agreement with China Railways Materials Commercial Corporation (“CRM”), announced by the Company on 6 January 2010 (the “CRM Agreement”), African Minerals has agreed to grant CRM an option, exercisable for 60 days from the date of this announcement, to subscribe in cash for up to 2.88 million new common shares at the Placing Price, representing approximately 14.4% of the Placing (the “CRM Option”). The CRM Option is being managed by Renaissance Capital Limited.
The proceeds of the Placing are to be used to commence construction of key infrastructure for Phase 1 of the Company’s flagship iron ore project at Tonkolili, referred to in the Company’s announcement of 6 January 2010, specifically:
* a haul road of approximately 120km in length to transport hematite iron ore from the Tonkolili mine site to the rail head at Lunsar; and
* pre-ordering major long-lead items for the refurbishment of Pepel Port and the railway to Lunsar, together with the requisite equipment, for a load-out capacity of 8 million tonnes of iron ore per annum.
The Placing is conditional upon completion of a due diligence exercise by the underwriters, the entering into a formal underwriting agreement with the underwriters and such agreement becoming unconditional and the admission of the New Shares to trading on AIM.
The Placing is conditional upon customary warranties, representations and conditions and industry standard termination provisions in respect of due diligence, a material adverse change or a force majeure event. Closing of the Placing is expected to occur and the New Shares admitted to trading on AIM on or about 11 February 2010.
Subsequent to the Placing, but excluding the CRM Option, the Company will have 233,639,654 common shares in issue.
Commenting on the successful fund raising, Frank Timis, Executive Chairman of African Minerals, said:
“We are pleased with the continued support that premier institutional investors in North America and the United Kingdom have given the Company, which is a further endorsement of the quality of the Tonkolili project and the executive management team we have assembled at AML.
The proceeds will allow us to expedite the construction of critical infrastructure required for the first phase of construction of our flagship iron ore project. This fund raising, together with the conditional CRM equity deal and two off-take agreements, places the Company in a very strong position to realise iron ore production from Tonkolili during the first quarter of 2011.”

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