London-listed African Minerals has raised £80-million in a cash placing, which it will use to fund the construction of key infrastructure at its Tonkolili iron-ore project in Sierra Leone.
African Minerals said institutional investors would underwrite 20-million new shares at 400p a share and that China Railway Materials (CRM) would have an option to subscribe in cash for up to 2,88-million new shares, representing 14,4% of the placing.
Earlier this month, African Minerals signed a deal with CRM, whereby the Chinese company would buy a 12,5% stake in African Minerals for £152,6-million, providing the majority of funding required for the Tonkolili project.
Chairperson Frank Timis said the proceeds of the £80-million placing would allow African Minerals to expedite the construction of the critical infrastructure required for the first phase of the Tonkolili project.
It would start construction of a haul road to transport haematite iron-ore from the Tonkolili mine site to the rail head at Lunsar and would use part of the proceeds to pre-order major long-lead items for the refurbishment of Pepel port and the railway to Lunsar.
"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," Timis added.
The placing is conditional upon the 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.
"We are pleased with the continued support that premier institutional investors in North America and the United Kingdom have given the company," Timis concluded.
Subsequent to the placing, but excluding the CRM option, the company will have 233, 639,654 common shares in issue.
Source: Mining Weekly
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