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UK-listed African Minerals will put the Tonkolili mine, which produces more than 20 million tpy of iron ore, and other operations on care and maintainance until $102 million in restricted cash is released by its joint venture and offtake partner, Shandong Iron & Steel Group (SISG), the miner said in a filing to London’s Alternative Investment Market (AIM) on Monday December 1.
The cash had not been released due to “continued disagreements” between it and the Chinese steel group, the miner said.
“[The company] continues to use its best efforts to obtain SISG’s authorisation to release these funds. However, there remains no certainty of this, or of its timing,” African Minerals said.
“The fall in iron ore prices and the operational challenges caused by the [current outbreak of] ebola disease have meant that the project has continued to operate at a loss,” ceo Alan Watling said.
Local staff in Sierra Leone will continue to be employed on normal wages and will be allocated to care and maintainance activities, founder and chairman Frank Timis said.
AIM suspended trading in African Minerals’ shares on November 20 amid financing concerns.
The miner said that share trading would remain suspended while there remained a “fundamental uncertainty [about] the financial position of the company”.
Sierra Leone’s iron ore sector has ground to a halt amid a “perfect storm” of the ebola outbreak and the iron ore price crash.
UK-listed London Mining filed for administration in October, citing cashflow difficulties caused by the slump in prices and increased costs associated with the ebola crisis.
The ebola outbreak, which was first recorded in Guinea at the end of last year, has since claimed almost 7,000 lives across Sierra Leone, Guinea and Liberia.
Infection rates remain “intense” in the most badly affected countries, according to the World Health Organization.
West Africa’s largest iron ore producer, African Minerals, is to shut down its Tonkolili iron ore mine in Sierra Leone indefinitely, amid a protracted slump in global seaborne iron ore prices.