* Appoints Alan Watling as chief executive
* Company is trying to replace a $250 mln loan
* Shandong requests more say in the project
By Silvia Antonioli
LONDON, Aug 15 Sierra Leone-focused iron ore
miner African Minerals has named a new chief executive
and obtained access to $248 million in cash through an agreement
with Chinese partner Shandong Iron and Steel Group (Shandong).
Access to the funding will give African Minerals some
breathing space as it grapples with lower iron ore prices and
the Ebola crisis in West Africa, which have put pressure on its
Its shares have lost about 90 percent of their value this
Under the agreement with Chinese steelmaker Shandong, the
company will gain immediate access to $284 million for its sole
project, Tonkolili in Sierra Leone - money that had been
earmarked for the second phase of the project's expansion.
African Minerals has a 75 percent stake in Tonkolili, and
Shandong holds the remaining 25 percent.
"Both shareholders have agreed to access the funds in the
Hong Kong joint project account... not only for construction
capital, but also for general working capital purposes, with
immediate effect," African Minerals said on Friday.
In agreeing to allow access to the funds, however, Shandong
requested some changes in management. In response, African
Minerals announced the appointment of Alan Watling as its new
chief executive after the resignation Bernard Pryor.
The Chinese steel mill also requested that the project's
financial and operational management be separated from that of
African Minerals, effectively increasing its influence over the
"The last few weeks have thrown up a perfect storm of low
iron ore prices and heightened concern over the serious Ebola
virus disease ... the second quarter has seen our received
price fall, putting pressure on our working capital
requirement," Roger Liddell, an African Minerals director, said
in a statement.
"With immediate funding secured ... we expect that the
operations will continue to grow to their potential."
Shandong, which has an offtake agreement with Tonkolili, has
also made a claim that African Minerals had offered better
pricing terms to other Chinese steelmakers, which goes against a
clause in its offtake agreement.
African Minerals said it was working with Shandong to agree
on the amount, the timing and method of a payment to repair this
issue, if required.
The mining company, whose debt amounted to $391 million as
of end-March, also said it was looking to refinance an expensive
$250 million loan.
"The company continues to evaluate opportunities regarding
an optimum capital structure over the medium to longer term," it
said in the statement. "The new management will also be
reviewing and putting in place an appropriate longer-term
structure and funding for African Minerals."
(Editing by Jane Baird)