24 May 2010 07:00
24 May 2010
Bellzone Mining plc
("Bellzone" or the "Company")
BINDING MOU REACHED WITH CHINESE PARTNER TO DEVELOP RAIL AND PORT INFRASTRUCTURE FOR THE KALIA IRON PROJECT AND TO FORM A 50/50 JOINT VENTURE TO DEVELOP ADDITIONAL IRON PERMITS IN GUINEA, WEST AFRICA
Bellzone Mining plc (AIM: BZM), the iron ore company developing the 2.4 billion tonne JORC magnetite Kalia Iron Project along the Company estimated 13 billion tonne Kalia magnetite deposit in Guinea, West Africa, is pleased to announce it has reached a Binding Memorandum of Understanding ('MOU') with China International Fund Limited ('CIF') with regards to the financing of the infrastructure required for the Kalia Iron Project.
The Binding MOU is subject to the parties agreeing and executing definitive agreements for the infrastructure company, joint venture agreement and off-take agreement on or before 30 June 2010 or such later date as is agreed between the parties.
Highlights of Binding MOU
·; CIF shall fund the entire infrastructure required for the Kalia Iron Project. The infrastructure will includethe rail system (including rolling stock), bulk storage facilities, port, port loading facilities, port services and power development required to produce and transport a minimum of 50 million tonnes per annum of iron ore from the Kalia Iron Project.
·; Bellzone shall transfer to CIF, with the agreement of the Guinean Minister of Mines and Geology of the Republic of Guinea, an area equal to approximately 50% of the Kalia II Prospect and 100% of the Faranah Permit and all available data relating to it.
·; CIF shall incorporate a new company by no later than 6 June 2010, dedicated for the development of the infrastructure (the "Newco"). US$40 million shall be paid by CIF to Newco within 5 business days of incorporation of Newco, which will be used solely to fund the feasibility study for the infrastructure required to transport and export production from the Kalia Prospect. On incorporation Newco will be owned 100% by CIF.
·; On finalisation and execution of the definitive agreements CIF will retain 90% of the issued share capital of Newco and Bellzone will be issued shares representing 10% of the enlarged issued share capital which shareholding shall be non-dilutable without the prior written consent of Bellzone (the "Carried Interest").
·; Bellzone shall retain the Carried Interest for the duration of the feasibility studies, construction and operation of the infrastructure without any obligation to finance the infrastructure.
·; Bellzone and its subsidiaries will be guaranteed a perpetual priority access right to the use of the infrastructure for the transport and export of the production from the Kalia Iron Project on terms to be agreed between the parties.
·; Bellzone and CIF agree to create a 50:50 joint venture to finance, develop, produce, transport, export and sell iron ore from the Forecariah Permits held by a subsidiary of CIF in south west Guinea.
·; Bellzone agrees that CIF has rights to purchase 100% of the off-take from the Kalia Prospect at market price (excluding any proceeds from the Kalia II Prospect transferred to CIF).
·; Bellzone will provide expertise to the Newco in connection with the design, construction and implementation of the infrastructure and agree to provide expertise and knowledge, and assist CIF where possible with the development and implementation of the Forecariah iron ore resources.
Nik Zuks, Managing Director of Bellzone Mining plc, commented: "I am delighted to announce this Binding MOU with China International Fund Limited. Under the terms of the Binding MOU, CIF will fund and construct the 286km rail and port facilities for our Kalia Iron Project in return for the right to purchase 100% of the off-take from Kalia. In addition, Bellzone will gain a 50% interest in the highly prospective Forecariah Permits located on the proposed rail alignment and in close proximity to the coast. This agreement will significantly de-risk Bellzone's implementation strategy by ensuring Bellzone's production value chain is secured from mine to customer.
CIF is a highly regarded group of companies with a proven track record of developing large infrastructure projects in Africa and has got a serious commitment to Guinea and its development. This infrastructure project, estimated at US$2.7 billion, is intended to form the first leg of developing a multi-user railway and port that is expected to open a number of opportunities for Guinea's mineral deposits".
His Excellency, the Honourable Mahmoud Thiam, Minister of Mines and Geology of the Republic of Guinea stated "This creates the most strategic link of the Transport Network required to unlock Guinea's iron ore potential.
It puts two mines on line within four years instead of one and multiplies annual mining revenue tenfold in a short time. It's historical and transformational."
Analyst Presentation
Bellzone Mining plc will be holding an analyst presentation today at 10am (BST) at Conduit PR's offices, 76 Cannon Street, London, EC4N 6AE.
A teleconference facility will also be available to dial into the conference call. If you would like to attend the presentation or participate in the conference call please contact Emily Fenton at emily@conduitpr.com or on +44 (0) 207 429 6608.
Enquiries:
| Bellzone Mining plc Nik Zuks |
+61 439 420 893 |
|
Canaccord Genuity Limited Nominated Adviser and Joint Broker to Bellzone Andrew Chubb/Tarica Mpinga |
+44 (0)20 7050 6500 |
|
Renaissance Capital Limited Joint Broker to Bellzone Simon Matthews/Thomas Beattie |
+44 (0)20 7367 7777 |
|
Conduit PR Jos Simson/Charlie Geller |
+44 (0)20 7429 6603 / +44 (0) 7899 870 450 |
China International Fund
China International Fund Limited was established in Hong Kong in 2003 to provide developing countries with the knowledge and expertise of China's economic reforms, explore a new framework for Chinese enterprises to expand overseas and introduce laudable concepts and worth-learning ideas from other developing countries into China .
Major businesses include large-scale national reconstruction projects and infrastructure construction in developing countries, e.g. Public Housing, Public Utilities, Highway, Railway, Airport, Building, Water Projects, Electricity Projects, Industrial Zone, Logistics Centre, Ship Building, Shipping, National Administration Complex and New City etc.
www.chinainternationalfund.com
Bellzone Mining plc
Bellzone Mining plc is an iron-ore exploration and development company with assets in Guinea, West Africa. The Company's flagship project, the Kalia Iron Project, is underpinned by its 100% owned Kalia iron deposit which has a maiden inferred magnetite JORC resource of 2.4 billion tonnes, located on the Kalia 1 prospect. Previous drilling results and internal estimates indicate that the Kalia iron deposit has the potential to host more than 13 billion tonnes of magnetite ore and 2.9 billion tonnes of oxide ore at surface. Exploration work continues to further delineate and increase the resources at Kalia with the SEIA and EIA studies underway to support the completion of the Bankable Feasibility Study.
Bellzone intends to develop a 50 million tonnes per annum ('mtpa') iron ore production through a two staged approach. First production is expected in 2014 at 20mtpa which is expected to fund the ramp up period to 50mtpa in 2018.
Bellzone is listed on the AIM market of the London Stock Exchange under the ticker 'BZM'.
www.bellzone.com.au
Definitions
In this announcement the following words and expressions shall have the following meanings
| "Forecariah Permits"
"Kalia I Deposit"
"Kalia Iron Permit"
"Kalia Prospect"
"Kalia II Prospect"
"Kalia Iron Project"
"Kalia Licence Area"
"Kalia Polymetals Permit" | means the permits granted to GDC Mining and Oil and Gas SA for the prospecting of iron ore in the prefecture of Forecariah, Guinea.
means the magnetite ore body covering an area of 29 km2 with a mapped west-northwest strike of 19 km within the Kalia Licence Area.
means permit No A/2009/3687/MMG/SGG granted to Bellzone Holdings Pty SARL for the prospecting of iron in the prefecture of Faranah, Guinea covering a surface area of 573 km2.
means the Kalia I Deposit and Kalia II Prospect
means the 30 km2 area of exploration activity with a mapped northeast to east-northeast strike of 20 km2 mainly within the Kalia Licence Area and extending 2.2 km within the Faranah Licence Area.
means the project including mine, rail, port and power development required to produce iron ore from the Kalia Prospect.
means the area subject to the Kalia Iron Permit and the Kalia Polymetals Permit.
means permit No A/2009/0930/PR/MMEH/SG granted to Bellzone Holdings Pty SARL for the prospecting of certain base metals (excluding iron) in the prefecture of Faranah, Guinea covering a surface area of 808 km2.
|
| "Faranah Licence Area" | means the area subject to the Faranah Permit.
|
| "Faranah Permit" | means permit No A/2009/2801/PR/MMEH/556 granted to Bellzone Holdings Pty SARL for the prospecting of iron in the prefecture of Faranah, Guinea covering a surface area of 808 km2. |