UPDATE 1-African Minerals seeks funding as shipments fall
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LONDON Nov 21 (Reuters) - African Minerals said it would need more financing to fund its working capital requirements as wet weather had reduced iron ore shipments from its flagship mine in Sierra Leone.
The miner, the largest of West Africa's emerging iron ore producers, owns the Tonkolili mine, which sits on one of the continent's largest iron ore deposits.
Shipping was suspended between August and October due to high moisture levels after unusually heavy rains.
African Minerals said on Wednesday it had arranged for $150 million of funds reserved for project capital expenditure to be used for working capital, and was in talks to convert its existing credit facility. That was expected to provide a further $40 million to $90 million.
"Even with the above necessary funding arrangements being successfully completed for the full amount before the end of 2012, the group has limited financial headroom," African Minerals said in a statement.
"If the expected level of sales is not achieved during the ramp up, the company will need to seek additional sources of funds."
Shares in the company were down 10 percent at 231 pence at 1423 GMT on Wednesday. They have lost nearly half their value this year.
Iron ore shipments in 2012 are expected to be at the lower end of its previous esimate of 5-6 million tonnes, African Minerals said. The company already downgraded its production forecast twice this year.
High moisture content makes the transport of iron ore unsafe, as it could lead to liquefaction of the mineral, which in some instances, has resulted in ships becoming unstable, capsizing and sinking.
This month, industry sources flagged the risk of transporting iron ore with high moisture content from Sierra Leone and said it was causing extensive loading delays and could raise shipping costs for miners operating in the country. (Reporting by Brenton Cordeiro in London and Abhishek Takle in Bangalore; Editing by Tom Pfeiffer)
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