Johannesburg - Metals company Assmang had entered into a share subscription agreement in which it would acquire a 19.9 percent equity interest in IronRidge, an Australian firm focused on iron ore exploration, for £11.74 million (R210m), it said yesterday.
The deal is expected to be completed once conditions, which include the admission of IronRidge to the Alternative Investment Market of the London Stock Exchange, are met.
IronRidge holds three prospecting licences in Gabon, covering about 5 352km².
The company expects that, if exploited, the licences have the potential to result in world-class iron ore mining projects.
Assmang, which focuses on iron, chrome and manganese ore mining, is controlled by Assore and African Rainbow Minerals (ARM).
“All the above opportunities are early stage. The Assore and ARM boards of directors believe in the long-term potential of IronRidge,” the companies said in a statement. “Its interest offers Assmang exposure to some of West Africa’s promising iron ore opportunities and could facilitate Assmang’s long-term access to high-grade iron ore with competitive capital and operating costs.”
The Tchibanga and Tchibanga North licence areas are about 60km from the port of Mayumba.
The Belinga Sud licence area lies within 140km of Booue on the Trans-Gabon railway.
The IronRidge investment forms a part of Assore and ARM’s objectives to evaluate, secure and develop long-term, value-enhancing, strategic investments.
The deal comes against the backdrop of a mixed iron ore outlook for this year. Support for the price remains at between $110 (R1 170) and $115 a ton for the medium term, until new lower-cost capacity comes on line.
Assmang’s iron ore export sales rose 5 percent to 14 million tons last year and local sales rose 50 percent to 2 million tons.
It operates open cast processes in the Northern Cape (Khumani Iron Ore Mine near Kathu and Beeshoek Iron Mine near Postmasburg).
In another deal, Assmang, Sumitomo Group and the China Steel Corporation agreed to establish a joint venture – a manganese alloy smelting facility in Sarawak, Malaysia, called Sakura Ferroalloys.
The intention is to commission and operate two furnaces with related infrastructure, equipment and services to allow for manganese alloy production.