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Afferro Mining (LSE:AFF) has announced that it is to sell its 38.5% stake of the Libereian Putu iron ore project to Russian mining giant Severstal.
The AIM listed west-African firm announced that it had reached the agreement, worth at least £115m, so that it could focus on its Cameron iron ore project.
In a statement the firm said it was “an appropriate time to divest the Company’s remaining non-controlling interest in the project” and that the “proceeds from divesting Putu ensure that the company will be able to accelerate its development strategy in Cameroon”.
The Cameroon project, based in Nkout, will now focus on the completion of its preliminary economic assessment. Starting work in November, Afferro is planning on a 2013 start time for a Definitive Feasibility Study.
Commenting on the sale Afferro CEO Luis da Silva argued that “divesting the minority stake in Putu to generate total cash proceeds of at least US$115 million allows the company to focus on its 100% owned flagship Nkout project” and that Afferro is now “well placed to enter a new and exciting phase of growth.”
Further Investment in Knout site
The proceeds of the Putu sale will also be put towards increasing the magnetite resource at Nkout.
Current estimates claim the Nkout site contains 944m tons of ore at 32.75 iron, with the potential for selling 18.5 million tons to be sold as Direct Shipping ore. The company hopes that the strategy will provide them with an early cash flow.
Announcing Q3 results in November, the firm said the Nkout had increased its overall mining resource by 41% following spending $5.7m on the site. Mr da. Silva claimed that the results were achieved “under budget and ahead of schedule” and that the firm has “grown the resource to 2Bt over the past 10 months”.
In regards to future investment in the Knout site the company stated that it will continue “to have discussions with potential strategic partners who would be prepared to fund Nkout’s infrastructure requirements. Although these discussions are at an early stage, it is expected that the preferred partner will also provide a long term off take agreement”.
References
↑ Nkout, Cameroon
