African Minerals Limited (AML), the leading iron ore miner in Sierra Leone, has gone broke.
The company which owns 75 percent of the Tonkolili Iron Ore Project in the north of the country said Tuesday it was unable to meet debt commitment in relation to a $400m convertible bond.
“Under the terms of the Bond, the biannual coupon payment of $17m is due on 10 February 2015. The Company advises it has insufficient funds to meet this payment, and it is unlikely that such a payment will be made in the near future,” AML said in a statement published on its website.
Tonkolili has a JORC compliant resource of 12.8Bnt and the AML project is said to have a 60+ year mine-life, indicating a vast wealth of resources buried in the country`s soil. But the miner has been in financing difficulties since November and work at its sites has virtually come to a halt.
AML in 2011 sold 25 percent stake of the project to the Chinese firm Shandong Iron and Steel Group, a development seen as a strategic move by the Chinese to satisfy its growing iron-hungry industry.
But lately Shandong reportedly has issues with how the company is run and since January was said to be in talks for a new financing deal.
Thursday`s statement by AML indicates those talks were still in progress regarding a long term funding solution. The company said it also continued to evaluate other potential funding solutions, including but not limited to a partial sale of its stake in the Tonkolili project.
“Reaching that outcome remains AML’s utmost priority and while the Board continues to make every effort to advance these discussions, there can be no certainty that agreement will be achieved,” it noted.
© Politico 11/02/15
