West African Iron Ore signs binding Letter of Intent for a $30 million finance facility and offtake agreement with Strategic Pa
September 02 2012 - 6:45AM
PR Newswire (Canada)
TSX VENTURE EXCHANGE: WAI VANCOUVER, Sept. 4, 2012 /CNW/ - West
African Iron Ore Corp. West African Iron Ore Corp. ("WAI" or the
"Company") is pleased to report the signing of a binding Letter of
Intent for a CAD$30 million facility between the Company and China
International Fund Limited ("CIF"). Amongst other activities, CIF
are in infrastructure development. This financing facilitates the
Company's timely completion of its maiden NI43-101 Resource Report
on the Wondima prospect, targeted for Q4 2012, the ongoing
exploration efforts, and longer-term production objectives. Main
terms of the Letter of Intent: CIF has, subject to approval of the
TSX Venture Exchange, agreed to finance up to CAD$10 million by way
of up to 10 drawdowns of CAD$1,000,000 each progressively based on
the capital expenditure requirements of the Company. Each
drawdown will be in the form of a convertible debenture
(collectively the "Debentures") with a term of 5 years and an 8%
annual interest rate. During the term of the Debentures, CIF
will have the option to convert all or any portion of the
outstanding Debentures into common shares of the Company at a
conversion price of CAD$0.10 per share (subject to the requirements
of the TSX Venture Exchange) to the extent that CIF's aggregate
beneficial ownership of common shares of WAI will not exceed 19.9%
of the issued and outstanding common shares of WAI at the time of
exercise. The Debentures will be secured, amongst other
things, by a first fixed charge on all the Company's assets and a
corporate guarantee given by its major shareholder, Sky Alliance
Resources Inc. On the Maturity Date, the Company will have
the option of repaying the maturing Debentures in cash, or with
off-take of iron ore production on the Forécariah Tenement. Any
outstanding Debentures will become immediately due and payable in
the event the licenses comprising the Forécariah Tenement have not
been renewed by December 31, 2012. CIF has also agreed to advance
an additional CAD$20,000,000, on similar terms to the Debentures,
and subject to the approval of the TSX Venture Exchange, upon
confirmation that certain mineral licenses have been renewed, and
that a technical report disclosing a minimum of 350Mt of iron ore
on the Forécariah Tenement has been prepared. In the definitive
agreement, CIF and WAI will enter into an off-take agreement with
respect to 50% of iron ore production from the Forécariah Tenement
for a term of five (5) years. The parties have agreed that the
purchase price of the iron ore shall be 95% of the market price,
based on the prevailing international price at that time. In
addition, CIF and WAI will define the related conditions that will
allow WAI to finance its mine development. "We are pleased to
welcome CIF as a strategic partner. CIF's involvement is a strong
gesture of confidence in our management team and the quality of our
assets. Among other activities and investments in Guinea, CIF has a
significant ownership position in Guinea Development Corporation
(GDC), which owns the mineral licenses on the neighbouring
properties. With its extensive and committed presence in
Guinea CIF's local knowledge will be of significant benefit to our
Forécariah project. As well, once our project undergoes a
feasibility study, CIF's established transport and port facilities
will provide our project tremendous logistical benefits to export
our iron ore. This new partnership combined with the full support
of the Guinean Government strategically positions our project on a
fast track, not only for the benefit of our stakeholders, but for
the benefit of the local community's economic development and job
creation." stated Guy Duport, CEO of West African Iron Ore Corp.
Update on the Forécariah permits extension and renewal: The
Forécariah Project is covered by three permits held by Sky Alliance
Ressources Guinée S.A. ("SAR Guinée"), a wholly owned subsidiary of
WAI, under License number A2008/043/DIGM/CPDM, published as order
A/2008/3722/MMG/SGG on October 8th, 2008 in the Official Journal of
the Republic of Guinea. The permits were valid until May 31st,
2012, and are currently in the process of being renewed under their
first 2-year-renewal period. In advance of the October 2011 renewal
date, SAR Guinée on July 4th, 2011 provided to the Minister of
Mines and Geology a written request with supporting documents for a
two year extension of the Forécariah licenses under the 1995 Mining
Code. On September 8th, 2011 the Company received a letter from the
Mines Minister stating that an extension of 3 months has been
granted to SAR Guinée. On December 19th, 2011 the Company received
a further letter from the Mines Minister stating that an
exceptional compensatory extension of 5 months has been granted to
SAR Guinée prior to first renewal. This exceptional compensatory
extension expired on May 31st, 2012. The Company made a submission
in accordance with the newly published Mining Code to the Mines
Minister for the first 2-year renewal period on the Forécariah
permit. Under the new Mining Code Article 20, a company exploring
for iron ore and/or bauxite can only possess in its name a maximum
of 3 permits with a total area of 1050 km2. A Commission nominated
by the Minister of Mines and Geology which members included the
Mining Advisors of the President and Prime Minister of Guinea
examined the Company's renewal application on July 12, 2012. On
July 26, 2012 the Commission conducted a site visit of our
Forécariah tenements and will be issuing their report to the
Minister of Mines and Geology and the National Mining Commission
with their recommendations. It is important to note, as of the date
of this release, only the President of the National Mining
Commission has been nominated by Presidential decree, with the
remaining 14 members to be appointed in the near future. Our
renewal will need to be approved by the said National Mining
Commission once its members are nominated by Presidential decree.
About China International Fund Limited: CIF is headquartered in the
Hong Kong Special Administrative Region of China, and has
investment footprints in 3 continents and more than 20 countries.
Amongst other activities, CIF are in infrastructure development,
where in particular it has participated in the rehabilitation and
development of new and existing transport infrastructure in nearby
Angola such as the New Luanda International Airport, which is
envisioned to become a major airport hub for West Africa. CIF has
rehabilitated almost 3,600 kilometers of railway and constructed 3
logistics bases in Angola occupying 925,000 m(2) thereby developing
the logistical backbone to support its infrastructure and
industrial implementation and development programs throughout
Africa. These industrial parks comprise cement and brick production
plants, sand and stone quarries, as well as production of
industrial materials such as steel sheets and plastic pipes. With
the strength of its experience in large-scale infrastructure
development in Africa, CIF is in the position to accelerate the
iron ore exploration and production goals of WAI, having recently
built road access within the boundaries of the Company's Forécariah
permits to provide access to the barging port of Konta. CIF has a
vision for Africa: Through South-South cooperation and in
partnership with private industry and the government, CIF will
develop public transport infrastructure such as road, rail,
seaports and airports to improve connectivity and accessibility, as
well as public utilities, agriculture, aqua culture, public
housing, construction materials and mining projects, where its
commercial objectives are aligned with the needs of countries to
develop the economy and improve, ultimately, the living standards
of the people. ON BEHALF OF THE BOARD Guy Duport CEO About the
Company: West African Iron Ore Corporation is dedicated to the
sustainable development of its mineral resources in the Forécariah
provinces of the Republic of Guinea. We nurture a harmonious
working relationship with the local community and the Guinean
authorities. We advocate the minimization of environmental impact
and the promotion of economic opportunity for all our stakeholders.
Our phased exploration program aims to establish the existence of
minable iron ore mineral reserves in sufficient quantities to
permit viable production of iron concentrate and other mineral
deposits. Statements in this release that are forward-looking
statements are subject to various risks and uncertainties, certain
of which are beyond the control of the Company including, but not
limited to, the impact of general economic conditions, industry
conditions, volatility of commodity prices, risks associated with
the uncertainty of exploration results and estimates and that the
resource potential will be achieved on exploration projects,
currency fluctuations, dependence upon regulatory approvals, the
uncertainty of obtaining additional financing and exploration risk.
Readers should also refer to the specific factors disclosed under
the heading "Risk Factors" in the Company's filings with Canadian
securities regulators. Such information contained herein represents
management's best judgment as of the date hereof based on
information currently available. The Company does not assume any
obligation to update any forward-looking statements, save and
except as may be required by applicable securities laws. Neither
TSX Venture Exchange nor its Regulation Services Provider (as that
term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this
release. West African Iron Ore Corp. CONTACT: Guy
DuportCEOguyduport@westafricanironore.comTel: 604-558-1198Investor
RelationsVanguard Shareholder SolutionsTel: 604-608-0824Toll Free:
1-866-638-0824ir@vanguardsolutions.ca
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