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Tonkolili iron ore project to produce by 2013

Tonkolili Hill –
site of the African
Minerals Tonkolili
iron ore project
 
Bangalore, India — MININGREVIEW.COM — 03 July 2009 – AIM-listed African Minerals Limited – a mineral exploration and development company with significant interests in Sierra Leone – says it expects US$2.6 billion (R21 billion) in capital expenditure for its flagship iron ore project at Tonkolili in the West African country, and forecast that production would start in 2013.

Revealing this to Reuters in a telephone call from here, chief executive Alan Watling said the capital expenditure forecast included costs for the mine and the building of a railroad and a deep-water port.

Earlier in the day, the company revealed that it had raised £63.8 million (R836 million) by selling shares to institutional investors for funding further drilling activities and developing infrastructure for the project.

The company – formerly known as Sierra Leone Diamond Company Limited – said it had sold 25.5 million shares at 250 pence apiece, which represented a premium of 4% to the stock’s Wednesday closing price of 240.25 pence.

The company’s second largest investor, Prudential Group Plc, bought 2.4 million shares for £6 million (R79 million) as part of the placing, taking its stake in African Minerals to about 14%.

“The Tonkolili deposits have the third-largest magnetite resources in the world,” Watling said, adding that the company intended taking the resource target from 5.1 billion tonnes to 10 billion tonnes over the next six months.He estimated that the Tonkolili project was currently worth about US$5 billion (R40 billion)  to US$10 billion (R80 billion).

Commenting on the successful fund raising, African Minerals executive chairman Frank Timis said: “This is a very large step towards us realising the full potential of our world class iron ore deposit at Tonkolili, and the future infrastructure rehabilitation and construction work will in due course provide positive benefits to the local community and the economy of Sierra Leone.”

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