2 Aug 2010 07:00
7.00am 02 August 2010
Bellzone Mining plc
("Bellzone" or the "Company")
Definitive agreements signed with China International Fund with the addition of a mine development financing package
Bellzone Mining plc (AIM: BZM) is pleased to announce the signing of a definitive agreement (the "Agreement") with China International Fund Limited ('CIF') to fund and develop the estimated US$2.7 billion rail, port and associated infrastructure services (the "Infrastructure") required for the Kalia Iron Project in Guinea, as stated in the Binding Memorandum of Understanding ('MOU') announced 24 May 2010.
The Company is also pleased to announce that CIF has agreed, at Bellzone's option, to fund, on market terms and conditions, the development of Bellzone's Kalia Mine, estimated at $1.2 billion, which has a maiden 2.4 billion tonne inferred JORC magnetite deposit along 4.3 kilometres of the 39 kilometre long Kalia Prospect.
Definitions used in this announcement are set out in the Appendix.
Highlights of the key terms, conditions and principles:
Funding the Kalia Mine
In addition to the original terms of the MOU announced on 24 May 2010, CIF has agreed to provide Bellzone a market related financing package, set by CIF, to support the development of the Kalia Mine. Should the terms not be acceptable to Bellzone, the Company will have a right to 20% of the off-take to support financing the Kalia Mine development by alternate sources.
Infrastructure Development
·; As announced on 14 June 2010, Kalia Horizon Minerals Pte Ltd ('KHM') has been formed and US$40 million has been received from CIF to fund the Infrastructure feasibility study. Following completion of the Infrastructure feasibility study (forecast for mid-2011), KHM, supported by CIF, will fund rail and deep water port infrastructure, rolling stock and associated services required for the transport and export of production from the Kalia Mine.
·; Bellzone will retain 100% ownership of the Kalia I deposit and 50% of the Kalia II prospect, which will underpin the Kalia Mine. Bellzone will relinquish the Faranah Iron Permit and approximately 50% of the Kalia II prospect and associated Kalia Polymetals Permit area. The Company will provide all available supporting information to CIF and support CIF in obtaining these permits.
·; CIF has first rights to purchase up to 100% of the off-take from the Kalia Mines at market price.
·; Bellzone will become a non-dilutable 10% shareholder of KHM with no funding obligations.
·; Bellzone will assign the exclusive rights, as detailed in the Infrastructure Accord, announced on 17 June 2010 to KHM, and render all available information and support necessary to complete the Infrastructure feasibility studies and obtain the Infrastructure concession and convention.
·; Bellzone and KHM will implement project management structures to develop the Infrastructure and Kalia Mine in parallel to ensure synergy in production start up milestones and goals.
Final Off-take and Transport Contracts
The parties agreed that the completion of the Infrastructure and Kalia Mine feasibility studies are critical to providing specific data required to define the transport tariffs and that the product quality specifications are necessary to support the off-take agreements. It was further agreed that the detailed transport and off-take agreements will be developed by the completion of the feasibility studies. The following key principles in relation to these agreements were confirmed as follows:
·; Bellzone and its subsidiaries will be guaranteed perpetual priority access rights to the use of the infrastructure for the transport and export of the production from the Kalia Mine.
·; Transport tariffs will be set at mutually acceptable terms based on the outcome of the Infrastructure feasibility study.
Forecariah Joint Venture
·; CIF and Bellzone will incorporate a new company, "Newco", to explore and develop the highly prospective CIF Forecariah Iron Permits;
o Newco will be held 50/50 by CIF and Bellzone.
o Newco will be funded either equally by the shareholders or through independent sources, as may be agreed by the shareholders.
o The shareholders will appoint the management to operate Newco
o Shareholders' interests will be managed through the Board (50/50 appointees) led by an independent Chairman whose appointment will be agreed to by both shareholders
o The parties agreed that a formal Joint Venture Agreement will be completed by mid September 2010
Nik Zuks, Managing Director of Bellzone Mining plc, commented: "Since the IPO we have continually delivered on our development plan. The signing of this definitive agreement is another significant step for Bellzone and the realisation of our 50 million tonne per annum Kalia Mine. Our partnership with CIF provides for a funded infrastructure solution for the Kalia Mine product and secures an offer of finance for approximately $1.2bn for the Kalia Mine development. With CIF's first rights to purchase 100% of our off-take, we have effectively established a market for our product. This agreement adds significant value to the Company by removing the largest risks to project completion.
In addition to the Kalia Mine developments, Bellzone and CIF will work together in a 50/50 joint venture to develop the highly prospective Forecariah Iron Permits, located only 40km from the Guinea coast line. Both Bellzone and CIF believe Forecariah has the potential to provide early production and cashflow.
Bellzone's commitment to the Kalia Iron Project and mineral and infrastructure development in Guinea is well known and I have full confidence that our commitment is matched by CIF, which is highly regarded for its proven track record of developing large infrastructure projects in Africa.
These projects, as the Honourable Mahmoud Thiam, Minister of Mines and Geology of the Republic of Guinea has stated, will unlock Guinea's mineral potential and significantly increase revenue for Guinea."
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 Limited
China International Fund Limited was established in Hong Kong. The strategic objective of CIF is to provide developing countries with the knowledge and expertise of economic reforms in China and other Asian countries, 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 of CIF include large-scale national reconstruction projects and infrastructure construction in developing countries, in particular, the Republic of Angola. The projects include Public Housing, Public Utilities, Cement Production, Highway, Railway, Airport, Building, Water Projects, Electricity Projects, Industrial Zone, Logistics Centre, 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 has a maiden inferred magnetite JORC resource of 2.4 billion tonnes, located on the Kalia I prospect. Previous drilling results and internal estimates indicate that Kalia Prospect has the potential to host more than 13 billion tonnes of magnetite and 2.9 billion tonnes of oxide at surface. Exploration work continues to further define the potential at Kalia. The SEIA and EIA studies are 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 a rate of 20mtpa which is expected to fund the ramp up period to a rate of 50mtpa in 2018.
On 2 August 2010, Bellzone signed definitive agreements with China International Fund ('CIF') with regards to the financing of the infrastructure and mine development required for the Kalia Iron Project in return for the rights to purchase 100% of the off-take at market price.
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 Iron Permits"
"Kalia I Deposit"
"Kalia Iron Permit"
"Kalia Prospect"
"Kalia II Prospect"
"Kalia Iron Project"
"Kalia Licence Area"
"Kalia Polymetals Permit"
"Kalia II Relinquished Area" | 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 km 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. means an area equal to approximately 50% of the Kalia II Prospect and, as at the date of this RNS, subject to the Kalia Polymetals Permit and the Kalia Iron Permit |
| "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. |