AMI.L Regulatory News (AMI)

8 Sep 2008 16:45



8 September 2008

African Minerals Limited

("African Minerals")

London Mining plc - The Sunday Times Article and London Mining's Press Release of 7 September 2008

African Minerals' attention has been drawn to an article in the Sunday Times in the UK published on 7 September 2008 and to a press release from London Mining plc ("London Mining") published on 7 September 2008. 

The article states that last week, London Mining filed a writ in a court in Sierra Leone seeking an injunction to remove African Minerals' workforce from "two stretches of disputed land" at African Minerals' iron ore project at Marampa, Sierra Leone.

It is African Minerals' view that the basis for London Mining's allegations is inaccurate and completely without foundation. Any legal action against African Minerals by London Mining will be robustly defended.

On a number of occasions the Government of Sierra Leone ("GoSL") has confirmed to African Minerals and to London Mining that African Minerals' co-ordinates in respect of African Minerals' Exploration Licence EXPL 09/06 are valid and that London Mining's claims to land outside their Mining Lease (ML 02/05) are invalid. The most recent confirmation was contained in a letter to London Mining and African Minerals from the GoSL dated 5 September 2008 and received today. Amongst other things, that letter states:

"4. The Ministry has discovered that Tecsbaco International Incorporated Company Limited registered with the Registrar-General's Department, Roxy Building, Freetown, a plan unsigned, unstamped and containing coordinates unapproved by the Mineral Advisory Board ….

8. The Ministry has discovered that the area covered by the unauthorized plan (ie 25 coordinate points …) as is presently contained in Mining Lease ML 02/05 registered at the Registrar-General's Department …. is within the area granted to SLDC Exploration Limited [a wholly-owned subsidiary of African Minerals] under its Exclusive Prospecting Licence EPL 18/04, which is the same area of land the company occupies under authority of Exploration Licence EXPL 09/06.

…the Ministry has requested the Attorney-General and Minister of Justice to take steps to rectify and/or amend the Mining Lease containing 25 points coordinates plan registered at Registrar-General's Department and/or cancel Mining Lease ML 02/05."

A copy of that letter and its schedules can be viewed via the following link:

http://www.african-minerals.com/Doc/pdf/RNSDocuments/LetterfromMoMRtoLMandAML050908.pdf

A historical chronology of the respective grants to mineral rights is as follows: African Minerals' subsidiary, SLDC Exploration Limited, was originally granted an Exclusive Prospecting Licence over the Marampa area in 2004, under EPL 18/04. That prospecting licence was subsequently converted into an exclusive Exploration Licence - EXPL 09/06 - in 2006, which specifically excluded the 12 points of the co-ordinates of the Mining Lease (ML 2/05) granted to Tecsbaco International Corporation Inc Co. Ltd ("Tecsbaco"). Meanwhile London Mining purchased Tecsbaco Mining Lease. 

The 12 points of the co-ordinates of that Mining Lease were clearly set out in Tecsbaco's application for that lease (which was approved by the Ministry of Mineral Resources) and reflect the 12 co-ordinates that African Minerals has always accepted as being valid. Since 2007 London Mining has sought to claim, inaccurately (but have been unable to provide any proof from the appropriate Ministry of the GoSL), that the co-ordinates under ML 2/05 are, in fact, greater than those set out in the original application for that lease. 

African Minerals has sought and received confirmation from the GoSL that the co-ordinates used by African Minerals are accurate and reflect the extent of each party's respective mineral rights. 

African Minerals believes that the letter of May 2007 referred to in the Sunday Times article did not confirm "the co-ordinates of the site", as alleged. In a letter of 30 May 2007 however, the GoSL did confirm that co-ordinates contained in ML 2/05 were those inherited from Tecsbaco. Those co-ordinates are, in fact, the 12 point co-ordinates that African Minerals has always recognised as being excluded from its Exploration Licence EXPL 09/06.

Despite a number of formal requests by African Minerals, London Mining has been unable to produce a valid document, stamped by the Ministry of Mineral Resources, setting out the co-ordinates which London Mining now claim to be theirs. In the circumstances African Minerals considers that in claiming mineral rights which it does not have, London Mining has consistently been inaccurate as to the extent of its mineral rights at Marampa. 

In August 2008 the GoSL undertook a demarcation exercise over the land and have confirmed in writing and by the physical installation of 12 concrete pillars representing the actual co-ordinates, that African Minerals' co-ordinates are valid and that those claimed by London Mining are not. 

Furthermore on 19 August 2008 the GoSL wrote to London Mining (with a copy to African Minerals) expressing their concern that representatives of London Mining had physically prevented officers of the Government from carrying out their duties in respect of their demarcation of the land. The GoSL considered London Mining's actions to be a "very serious contravention of your [London Mining's] Mineral Rights obligations which resulted in a threat to peace." 

London Mining is also responsible for the removal of high value iron ore tailings from African Minerals' licensed area and their subsequent stock-piling on London Mining's property. African Minerals is in the process of taking legal action to ensure that these tailings are returned to its licensed area. Meanwhile the GoSL has, with the assistance of the police, removed London Mining personnel and equipment from African Minerals' licensed area.

As previously announced, on 7 May 2008 the GoSL confirmed in writing the validity and good standing of African Minerals' mineral rights in Sierra Leone.

The Sunday Times article also alleges that the position of the Government with regard to the licence dispute changed in favour of African Minerals following a visit by the "new mines minister" to Romania, with African Minerals' Executive Chairman, Mr Frank Timis.

The visit to Constantza Port (which has a handling capacity of over 100 million tons per year [see note 1] and which services the iron, coal and steel industries in Romania) took place in April 2008. It was a consequence of African Minerals' expressed interest in developing and refurbishing the port and railway infrastructure in Sierra Leone that would service African Minerals' and third parties' mining interests in the area, including those of London Mining. The delegation who visited Romania included three senior ministers from the GoSL. 

The purpose of the visit was for the delegation to see how an operating port and railway, suitable for the transport of iron ore, could be replicated in Sierra Leone. The visit was arranged by Mr Timis as a consequence of him having an investment in the Constantza Port. Based on a presentation by African Minerals and as a result of the visit to an operating port, the GoSL signed an exclusive Memorandum of Understanding ("MoU") with African Minerals to refurbish the Pepel Port in Sierra Leone and to build a standard gauge railway from the port to Marampa, to be extended to African Minerals' operations at Tonkolili. African Minerals refers to its announcement of 6 May 2008, setting out further details of the MoU, including the obligation of African Minerals to make the port and railway facilities available to third parties at commercial rates. African Minerals believes that any memorandum of understanding signed between London Mining and the GoSL to rebuild the port and railway infrastructure lapsed in or about October 2007.

Any implication that the Government of Sierra Leone was improperly influenced by this visit would be highly defamatory of African Minerals, Mr Timis and the representatives of the Government of Sierra Leone. African Minerals and Mr Timis will be taking such action as they may be advised to seek redress against any such unsubstantiated implication.

On 7 September 2008 London Mining released an announcement entitled "Writ issued in relation to Marampa iron ore project, Sierra Leone". African Minerals considers that the points raised by London Mining in that announcement are adequately covered in this release. 

Commenting on the Sunday Times article, Mr Timis said: 

"London Mining has made a number of inaccurate statements as to African Minerals' mineral rights in Sierra Leone. These rights are a matter of public record and I would invite shareholders of African Minerals who may be concerned by the inaccurate claims of London Mining to view the letter from the Government of Sierra Leone dated 5 September 2008 via the link provided in this announcement. 

African Minerals has invested over US$100 Million in exploration and development projects in Sierra Leone, including substantial amounts on the Marampa exploration area, in undertaking a high-resolution aero-magnetic survey and a ground gravimetric survey, mapping and rock chip sampling, drilling and metallurgical test work of the Marampa exploration area, prior to London Mining's inaccurate claims.

African Minerals has always enjoyed a professional and harmonious relationship with the Government and is committed to developing its long-term projects in Sierra Leone, including Marampa, Tonkolili and the port and railway infrastructure. As far as African Minerals is concerned there are no contradictory messages from the Government concerning either our mineral rights or the Memorandum of Understanding with regard to the port and railway infrastructure. 

African Minerals will be pursuing legal action against London Mining for trespass and for the removal of iron ore tailings from land licensed to African Minerals onto land held under licence by London Mining".

Having provided this clarification announcement further to this morning's RNS release, the Company's AIM securities will be restored to trading with effect from 7.00am on 9th September 2008

[Note 1 - data supplied from Constantza Port web-site]

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