Jan. 19, 2011 - UK-based Maghreb Minerals will provide fluorspar company Sallies with up to $8-million in working capital to restart operations at the Witkop mine in South Africa.
This follows after Maghreb announced in late December that it would acquire a controlling interest in Sallies.
Maghreb agreed to buy New York-based Firebird Management affiliate Firebird Global Master Fund s total equity stake in Sallies, totalling about 484.9-million ordinary shares, or 66.9%.
Following the transaction, Maghreb, which previously held 11.4% of Sallies, would hold a majority 78.3% stake in the South African company.
Firebird Management owns 56% of Maghreb.
Maghreb would provide Sallies with an initial advance of $2-million. Thereafter, Sallies may apply at any time before December 31, 2011, to draw a sum of not less than $1-million and not more than $2-million and Maghreb would be entitled to grant or refuse such a drawdown. The loan was unsecured.
Interest on the loan would be charged at a rate of 10% a year. The first interest would be paid on June 30, 2011, and quarterly thereafter. The principal amount and any accrued but unpaid interest would be repaid by no later than December 31, 2012.
Sallies owns the Witkop and Buffalo fluorspar mines in South Africa. The Witkop mine has been on care and maintenance since June 2009, at a monthly cost of R2.5-million, as a result of a collapse in demand for acid-grade fluorspar amid the global economic slowdown.
Maghreb CEO Dunbar Dales said that the decision to restart Witkop is dependent on receiving orders for tonnages of sufficient magnitude.
The company have been preparing the Witkop mine for production restart from the time it got involved in June 2010, he said.
"We assessed geological data, remodelled the mine, fixed some problems and ran the plant to test the operation. During December, we had a problem with a crusher, which was in a bad state, but we fixed it and it is currently being commissioned, he noted.
Dales added that the mine was ready to start quickly. Our planning shows that it will take about two-and-a-half months from the restart of production until shipment.
The company is currently in discussion with numerous possible customers.
"Sale contracts are currently under negotiation and are expected to be concluded in the coming months as the company works with key customers to rebuild its offtake commitment, said Dales.
Maghreb sees the majority control of Sallies as key to its strategy of acquiring assets in the fluorspar sector globally to enable it to develop critical mass in the sector.
Maghreb also acquired a strategic 20% shareholding in Kenya Fluorspar Company (KFC), which operates a mine located at Kimwarer.
Meanwhile, Maghreb announced on Wednesday that Nicholas Davidoff of Firebird Management has been appointed as nonexecutive chairperson to succeed Richard Linnell, who is resigning following the signing of the agreements to acquire Firebird's interests in Sallies and KFC.
He would remain a nonexecutive director of the company.
This follows after Maghreb announced in late December that it would acquire a controlling interest in Sallies.
Maghreb agreed to buy New York-based Firebird Management affiliate Firebird Global Master Fund s total equity stake in Sallies, totalling about 484.9-million ordinary shares, or 66.9%.
Following the transaction, Maghreb, which previously held 11.4% of Sallies, would hold a majority 78.3% stake in the South African company.
Firebird Management owns 56% of Maghreb.
Maghreb would provide Sallies with an initial advance of $2-million. Thereafter, Sallies may apply at any time before December 31, 2011, to draw a sum of not less than $1-million and not more than $2-million and Maghreb would be entitled to grant or refuse such a drawdown. The loan was unsecured.
Interest on the loan would be charged at a rate of 10% a year. The first interest would be paid on June 30, 2011, and quarterly thereafter. The principal amount and any accrued but unpaid interest would be repaid by no later than December 31, 2012.
Sallies owns the Witkop and Buffalo fluorspar mines in South Africa. The Witkop mine has been on care and maintenance since June 2009, at a monthly cost of R2.5-million, as a result of a collapse in demand for acid-grade fluorspar amid the global economic slowdown.
Maghreb CEO Dunbar Dales said that the decision to restart Witkop is dependent on receiving orders for tonnages of sufficient magnitude.
The company have been preparing the Witkop mine for production restart from the time it got involved in June 2010, he said.
"We assessed geological data, remodelled the mine, fixed some problems and ran the plant to test the operation. During December, we had a problem with a crusher, which was in a bad state, but we fixed it and it is currently being commissioned, he noted.
Dales added that the mine was ready to start quickly. Our planning shows that it will take about two-and-a-half months from the restart of production until shipment.
The company is currently in discussion with numerous possible customers.
"Sale contracts are currently under negotiation and are expected to be concluded in the coming months as the company works with key customers to rebuild its offtake commitment, said Dales.
Maghreb sees the majority control of Sallies as key to its strategy of acquiring assets in the fluorspar sector globally to enable it to develop critical mass in the sector.
Maghreb also acquired a strategic 20% shareholding in Kenya Fluorspar Company (KFC), which operates a mine located at Kimwarer.
Meanwhile, Maghreb announced on Wednesday that Nicholas Davidoff of Firebird Management has been appointed as nonexecutive chairperson to succeed Richard Linnell, who is resigning following the signing of the agreements to acquire Firebird's interests in Sallies and KFC.
He would remain a nonexecutive director of the company.
