Funding problems surrounding West Perth-based Sphere Investments Ltd's Guelb el Aouj iron ore project in Mauritania have been resolved, with one party to a joint venture planning to take a 49.9 per cent stake deciding to go it alone.
Funding problems surrounding West Perth-based Sphere Investments Ltd's Guelb el Aouj iron ore project in Mauritania have been resolved, with one party to a joint venture planning to take a 49.9 per cent stake deciding to go it alone.
Sphere, and its joint venture partner - Mauritanian State-owned iron ore company, Société Nationale Industrielle et Minière, had planned to offload the stake to a consortium of Saudi Arabia Basic Industries Corporation and Qatar Steel.
Today, Qatar Steel announced it would acquire the 34.9 per cent of the project intended for SABIC, having purchased a 15 per cent stake earlier in the year, for the same price of US$375 million, now worth A$409 million.
A new operating company will be established to develop the initial seven million tonnes per annum direct reduction pellet project following completion of a bankable feasibility study expected in January 2008.
SABIC, which has become a long-term offtake partner in the project, requested an extension to its side of the deal after concluding the project did not meet the 18 per cent return on investment it normally applied to its industrial projects.
Sphere recently completed a $48 million capital raising and will soon commence a drilling campaign at its wholly owned Lebtheinia iron project in Mauritania.
The full text of a company announcement is pasted below
Sphere Investments Limited (Sphere) is pleased to announce that Qatar Steel Company (QSC) has confirmed its purchase of 15%, and that it has also received Board approval to acquire an additional 34.9% interest, in the Guelb el Aouj Iron Ore Project (the "Project") in Mauritania for a total consideration of US$375 million for 49.9% of the Project.
The Project is owned equally by Sphere and the Mauritanian State-owned iron ore company, Société Nationale Industrielle et Minière (SNIM). Earlier this year, Sphere and SNIM had conditionally agreed to sell 49.9% of the Project to Qatar Steel (15.0%) and the Saudi Arabian company, SABIC (34.9%) for US$375 million, subject to their Board approvals by 31 October 2007.
SABIC confirmed conditional acceptance of its share of the US$375 million offer within the agreed timeframe, but required additional guarantees for its investment to proceed. Notwithstanding the outcome of the above, SABIC has advised that it wishes to continue its support of the Project and the Partners with long-term offtake agreements.
As previously announced, a new operating company will now be established and will be responsible for developing the first 7 million tonnes per annum Direct Reduction (DR) pellet project following completion of the BFS expected in January 2008.
Sphere's Managing Director, Alexander Burns, welcomed Qatar Steel's decision to become a major participant and shareholder in the Project and any future expansions and the ongoing support of SABIC as a long-term offtake partner. He said "We are delighted with the support of Qatar Steel as an equity participant and SABIC as an off-taker in the project. This support from major Gulf industrial companies, Qatar Steel and SABIC, will underpin the expansion and value adding of Mauritania's established iron ore industry.
Qatar Steel Director and General Manager, Sheikh Nasser Hamad Al-Thani said "Our involvement reflects our strong confidence in the Guelb el Aouj Project. We look forward to working together with all parties to bring the Project successfully to fruition in the soonest practicable timeframe and, with the support of SNIM, Sphere and the Government of Mauritania, to jointly develop expansion projects based on the extensive resources in the joint venture area in consultation with our other regional partners."
Sphere is well funded following its recent $48 million capital raising and is now due to commence an aggressive drilling campaign to define a JORC compliant resource on its 100% owned Lebtheinia Iron Project, also located in Mauritania.
