African Minerals is making significant progress on its projects including the expansion of its existing rail and port infrastructure in Pepel, Sierra Leone.
In an expansion update Tuesday the company announced it was ramping up production in Sierra Leone. The organisation said it intends to expand the works at Pepel rather than develop a new port at Tagrin Point.
Afrian Minerals is also increasing production at the Tonkolili ore mine, targeting saprolite hematite concentrate production of up to circa 35Mtpa from 2016.
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The revised plan is estimated to total $2bn in capital expenditure, with cash costs similar or lower than the current direct shipping ore phase. The company expects substantial capital savings of $1bn compared to its previous expansion plan as it will reduce risks and lower social and environmental impact.
Chief Executive Officer, Keith Calder, said: "We have made good progress with value engineering and optimisation in our Tonkolili mine expansion strategy. While our strategy regarding the mine and plant is mostly unchanged, we have now decided to leverage our existing rail and port infrastructure at Pepel to achieve the expanded export tonnage. This will significantly reduce capital costs, and de-risk the project's delivery, whilst at the same time reducing social and environmental impacts.
"This approach will provide a significantly better value, capital efficiency and risk proposition for all of our stakeholders."
The company has also agreed to raise its restriction on share ownership from 12.5% to 15% following a request from China Railway Minerals.
African Minerals will, however, limit China Railway's voting shares at 12.5%, with additional shares purchased to be voted at shareholder meetings by an independent non-executive director.
"We welcome this strong support from one of our cornerstone shareholders and partners as we ramp up production to a sustainable level of 20Mtpa in Q2 2013, and we believe this sends a strong signal of the underlying value of the Company to the market," Calder said.
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