Afferro Mining to sell Putu stake for US115 mln
Afferro Mining (LON:AFF, CVE:AFF) this morning revealed a US$115 million deal to sell its 38.5 per cent stake in the Putu iron ore project to an Severstal Resources associate company Lybica Holdings.
Lybica owns the other 61.5 per cent of the Putu joint venture project, in Liberia.
The value of the deal, which equate to around £73 million, is almost double the current market capitalisation of £43.1 million.
The funds will allow Afferro to accelerate the development of its wholly-owned Nkout iron ore project in Cameroon, it said. The firm also explained that the cash will enhance its negotiating position as it seeks a strategic partner for Nkout.
"This transaction demonstrates Afferro's ability to successfully generate significant returns for our shareholders," said chief executive Luis da Silva.
"Divesting the minority stake in Putu to generate total cash proceeds of at least US$115 million allows the Company to focus on its 100 per cent owned flagship Nkout project and minimises shareholder dilution.
"With the focus and cash, Afferro will be extremely well placed to enter a new and exciting phase of growth. We would like to thank Severstal for the successful partnership between our companies during the last three years."
Afferro will receive an initial payment of US$65 million in cash on completion, which is expected to be no later than February 28. A further US$50 million deferred payment will also be due. The firm said that it would receive an additional consideration if Putu was sold to a third party in the future.
The firm added that it will be release from any further capital contribution to Putu from January 1.
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