LONDON (Alliance News) - Ferrex PLC Wednesday said it has been notified that Anglo American PLC and Kumba Iron Ore Ltd have pulled out of plans to help fund the development of Ferrex's Mebaga iron ore project in Gabon.
In December last year the parties signed the deal, which would have seen Anglo fund the exploration of Mebaga over two years, providing substantial development to Ferrex?s project.
The deal gave Anglo and Kumba the option to take 100% ownership of the project via a purchase agreement, but gave Ferrex 100% control of the site if the two parties chose not to purchase the project.
The deal was subject to due diligence and approval by the board of the parties concerned.
On Wednesday, Ferrex said Anglo and Kumba had finished legal and technical due diligence and approval for the deal was granted by the Gabonese Ministry of Mines and Ministry of Commerce.
However, despite successful due diligence, both parties decided not to follow the transaction.
Mebaga, the nearest iron-ore development to the Atlantic Coast in the region, is located in a key West African belt of resources and has an exploration target of 90 million to 150 million tonnes at 35% to 65% iron ore and 550 million to 900 million tonnes at 25% to 40% iron ore over an 8 kilometre space in a 19 kilometre strike length so far discovered.
The company said it remains highly confident on Mebaga and said it believes discussions with other strategic funders will be concluded in time to allow drilling to start in the next dry season.
"The termination of this Term Sheet is obviously disappointing considering the significant amount of work that went into successfully completing the due diligence and obtaining all necessary government approvals. Based on successful completion of all other conditions precedent, and the lack of guidance from the Parties, we can only surmise that the reason for termination was due to a change in strategy at the corporate level," Managing Director Dave Reeves said in a statement.
Ferrex shares were down 10% to 1.28 pence, putting it amongst the top AIM All-Share fallers on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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