Shandong Iron and Steel last week announced that it had acquired African Minerals Ltd’s (AML) 75% stake in the Tonkolili iron ore mine in Sierra Leone and that it now owns 100% of the equity of Tonkolili Iron Ore (SL) Ltd and the associated infrastructure company African Port and Railway Services (SL) Ltd. The Administrators understand that Shandong has acquired AML’s interest in those project companies through an enforcement sale over AML’s shares in intermediate holding companies and that this sale was implemented by Madison Pacific Trust, as security agent under the group’s pre-export finance facility, on the instructions of Shandong Steel Hongkong Zengli Ltd, the secured lender under that facility.

In conjunction with their legal advisers, the Administrators are continuing to investigate the circumstances of the sale with a view to ensuring that AML’s interest has been dealt with properly, according to the law.

The mine contains 12.8 billion tonnes of JORC compliant iron ore resources (11,500 Mt of magnetite ore). It is considered to be one of the world’s largest magnetite deposits.

The first phase of development included the establishment of a mine, reconstruction of the Pepel Port and 74 km of existing railway, and the construction of a new 126 km narrow gauge railroad. First phase direct shipping hematite iron ore production increased up to 20 Mt/y in 2013.

The second phase was expected to produce 23 Mt/y of high grade hematite concentrate. It includes the construction of a concentrator facility, at the mine site, with a capacity to process 30 Mt/y, and the development of a new purpose built port at Tagrin Point.

A proposed third phase was to produce magnetite concentrate using a series of large-scale magnetite concentrators.