Frank Timiș , the founder of Sierra Leone’s biggest iron ore producer, African Minerals, has agreed to buy the Marampa mine in the Ebola-stricken country from London Mining, which went into administration last week.
London Mining has been at the centre of coordinating efforts to fight the spread of Ebola in Sierra Leone, and its collapse raised fears about international efforts to combat the epidemic.
Timiș has agreed a $20m (£12.5m) funding agreement with Australia’s Cape Lambert Resources to help him acquire Marampa. He is seeking to do the deal through his private Timis Mining business instead of African Minerals, which is listed in London and has been affected by the Ebola outbreak.
A spokeswoman for Timiș confirmed details of financing for the deal released by Cape Lambert Resources to the Australian stock exchange. Cape Lambert will lend Timiș $8m for a year and pay $12m for a royalty of $2 for each tonne of iron ore extracted from Marampa for four years if the deal goes through.
African Minerals and London Mining have both been hit by a 40% drop in the price of iron ore and disruption caused by the Ebola epidemic.
The number of deaths from Ebola has increased to 20 a day in western Sierra Leone, the disease edging closer to the Marampa mine while previously it was mainly in the east of the country.
London Mining is building a 130-bed Ebola treatment centre near Lunsar, 60 miles east of Freetown, and has donated the equivalent of £103,000 to the Sierra Leonean effort to stop the spread of the disease.
The heavily indebted company, which has been pushed to the brink by collapsing iron prices combined with the difficulty of working through the Ebola crisis, is one of Sierra Leone’s biggest employers and contributes about 10% of the nation’s GDP.
London Mining entered administration last week after it ran out of funds and failed to find a buyer for the firm. It said it would work with PwC, its administrator, to ensure that a buyer was found for Marampa.
Marampa employs about 1,300 people and has enough iron ore reserves for 40 years of mining. The site is about 74 miles from African Minerals’ Tonkolili mine.
Analysts at Investec said: “There is no guarantee that TMC [Timis Mining] will get Marampa, but it certainly means that there will be another offer on the table for the administrator. While we believe that African Minerals is the natural acquirer of [London Mining’s] assets, given its significant infrastructure in the region and the transport cost savings it can thereby realise for the Marampa operation, it is interesting that it is Timiș’ private company purportedly doing the bidding, perhaps because it can more readily realise the funding to make the offer.”
