9 Aug 2012 07:00
09 August 2012
Bellzone Mining plc
("Bellzone" or the "Company")
Forecariah Offtake Agreement with Glencore
Highlights:
·; Offtake agreement signed with Glencore for life of mine 58% Fe product
·; Provisional payment mechanism based on a percentage of the prevailing Platts IODEX Fe CFR China benchmark pricing system at time of loading
·; Best price incentive structure based on an upside sharing of the difference between the initial Platts base price, adjusted for market swings, and actual price achieved
·; Minimum price cap fixed as a percentage against prevailing Platts IODEX Fe CFR China benchmark pricing system
·; US$15m early payment facility available after 5 exported ship loads
Bellzone Mining plc (AIM:BZM) is pleased to announce the signing of a life of mine offtake agreement (the "Agreement") with Glencore International AG ("Glencore"), for the Company's 50% share of the Fe production from the Forecariah joint venture ("FJV") project in Guinea.
The terms of the Agreement are based on the 58% Fe Yomboyeli product specification. The pricing mechanism contains an incentivised component to achieve best price. The incentive component is based on percentage sharing by Glencore and Bellzone of the difference between the actual price achieved and the provisional payment made to the Company on ship loading, adjusted for Fe pricing changes of the Platts IDOEX Fe CFR China benchmark, and any internal penalties or bonus provisions for grade, lump/fines content or deleterious material content as per the agreed product specification.
A minimum price cap for the product has been set as a fixed percentage of the prevailing Platts IODEX Fe CFR China benchmark pricing system.
The Agreement provides for Bellzone to be provisionally paid for any shipment on loading with the balance being adjusted against actual sale price. Glencore will take product on an FOB (free on board) basis at the FJV's Konta loading facility.
In conjunction with the offtake contract, a prepayment drawdown facility of US$15m has been made available to Bellzone by Glencore (the "Facility"). The Facility is available to Bellzone once the Company has shipped a minimum of 750,000 wet metric tonnes or five vessels.
China International Fund Limited, Bellzone's FJV partner has contractual tag-along rights should they elect to use the Glencore offtake agreement to export their 50% entitlement of the FJV's Fe production.
The Agreement envisages the first export in early Q4 2012.
Nik Zuks, CEO commented: "We are pleased to have signed an agreement for Bellzone's 50% of the Forecariah offtake to a global commodity trader such as Glencore. The offtake agreement affords both parties the structure to establish the FJV product in the market at best possible price. The offtake agreement is for life of mine and covers the material that the JV has identified for the next eight years of production using the internal resource estimation process and we look forward to announcing a JORC resource for this in Q4 this year. The reality of the achievement of the team in this fast track development is becoming clearer as the actual shipping of the first production export gets ever closer. We expect exports to commence in Q4 2012."
Enquiries:
Bellzone Mining plc
Terry Larkan/Graham Fyfe +61 (0) 8 9420 8900
Canaccord Genuity Limited
Nominated Adviser and Joint Broker to Bellzone +44 (0)20 7523 8000
Andrew Chubb/Tarica Mpinga
Renaissance Capital Limited
Joint Broker to Bellzone +44 (0)20 7367 7777
Rob Edwards
Tavistock (UK)
Jos Simson/Mike Bartlett +44 (0)20 7920 3150 / +44 (0)7899 870 450
PPR (Australia)
David Ikin
+61 (0) 8 9388 0944 / +61 (0) 408 438 772
About Bellzone Mining Plc
Bellzone Mining plc is an operating and exploration and resource development company with iron ore and nickel/copper permits in the Republic of Guinea, West Africa.
Kalia Mine Project
The Company's flagship project, the Kalia Mine Project, is planned to produce 46mt of oxide iron ore and iron ore concentrate in 2020. The Kalia Mine Project has a 6.16bt magnetite JORC resource as well as an oxide and supergene JORC resource that will produce151mt of +58% product from just 10.5% of the 55km2 of the mapped surface oxides on the Kalia permit. Drilling results and internal estimates indicate that the Kalia Mine Project has the potential to host more than 10 billion tonne of magnetite and 2 billion tonne of in situ oxide.
CIF - Project, Financing & Infrastructure Partner
Bellzone has a Definitive Agreement ("Agreement") with China International Fund Limited ("CIF"). The Agreement gives CIF right of first refusal to purchase the Kalia Mine Project's production at market rates and CIF commits to providing Bellzone commercially related funding for the development of the Kalia Mine Project.
The Agreement contains CIF's commitment to fund and build commercially operated rail and port infrastructure that will enable Bellzone to export production from the Kalia Mine Project. The infrastructure is being developed by Kalia Horizon Minerals Pte Limited, an entity that is 90% owned by CIF with Bellzone having a 10% carried interest. The Agreement provides for Bellzone to be the lowest cost user with permanent priority access.
Forécariah JV
Bellzone and CIF have fully funded a joint venture to undertake the accelerated exploration and development programme at CIF's Forécariah iron permits that lie between 30 and 80 kilometres from the Guinea coast. The Forécariah permits are held in a CIF subsidiary, Guinea Development Corporation ("GDC") and will be transferred to the JV operations company, Forécariah Guinea Mining SA as per the terms of the definitive and JV shareholder agreements. Commercial production commenced in May 2012 and production will be ramped up through 2012 to a rate of 3-4mtpa. Offtake agreement signed with Glencore.
Other activities
Bellzone has completed a mapping and surface sampling programme identifying highly prospective targets at its Sadeka Nickel/Copper Project. The VTEM aerial survey has been completed and highly prospective targets have been identified and will form the basis of the 2012 drilling programme due to commence in December 2011. A key anomaly has been drilled with results due in Q3 2012