Romanian businessman Frank Timis is in talks with trader Gerald Metals about an offtake agreement for iron ore from the Marampa mine in Sierra Leone, which Timis has bought from the administrators of London Mining, industry sources said.
Timis, who is chairman and founder of African Minerals, a heavily indebted rival to London Mining in Sierra Leone, bought the Marampa mine last month through his private vehicle Timis Mining Corporation.
Signing an offtake deal, whereby a buyer prepays for a portion of future production, would give Timis’s private company financial support to operate the Marampa mine.
London Mining went into administration after struggling with high costs, a sharp drop in iron prices and the impact of the Ebola virus on its operations in West Africa.
“Timis is in advanced talks with Gerald Metals for an offtake on Marampa,” said one of the sources. “If they haven’t signed an agreement already it should be a matter of days now.”
Gerald Metals and Timis Corporation declined to comment.
African Minerals’ Tonkolili mine neighbours the Marampa mine, both of which being of vital importance for the economy of Sierra Leone.
The two assets would both benefit from sharing infrastructure to export the ore but London-listed African Minerals said when Marampa was put up for sale that it had decided not to try to buy it because of the potential impact on its own debt refinancing schedule.
After buying the mine, Timis Mining Corporations then went on to agree access for Marampa to African Minerals’ transport infrastructure.
However, African Minerals said earlier on Monday it had started to shut down its operations in Sierra Leone because it did not have enough working capital. (Editing by Greg Mahlich)