African Minerals founder to buy broke London Mining's Sierra Leone assets

African Minerals founder to buy broke London Mining's Sierra Leone assets

Truck carrying iron ore from Marampa mine in Sierra Leone. 

African Minerals (LON:AMI) chairman and founder Frank Timis has struck a $20 million deal to buy failed West African miner London Mining's (LON:LOND) iron ore mine in Sierra Leone from administration through his private company.

African Minerals founder to buy broke London Mining's Sierra Leone assets

Romanian businessman Frank Timis is set to rescue Sierra Leone's iconic iron ore Marimpa mine.

The agreement between Timis Mining Corporation and Australia's Cape Lambert Resources will help Timis to fund the purchase of the Marampa mine, which employs 1,400 people in the West African country and has iron ore reserves expected to support production for the next 40 years.

The news come as London Mining shares have collapsed in recent weeks after failing to find a buyer for the business, which the miner was hoping to sale as a way to pay mounting debts following a slump in iron ore prices.

Sierra Leone's finance minister Kaifala Marah flew to London on the weekend to join emergency talks about the potential sale of Marampa mine, adjacent to Timis’ Tonkolili iron ore project.

Marampa is expected to produce 5 million to 7 million tons a year, which equates to an annual royalty of $10 million to $14 million, or as much as $56 million over the term of the deal, Cape Lambert Executive Chairman Tony Sage said in the statement.

The funding package takes the form of a 12-month $8 million loan and a $12 million royalty purchase, which gives Cape Lambert $2 for each metric ton of iron concentrate sold by the mine.