TSX VENTURE EXCHANGE: WAI
VANCOUVER, Sept. 4, 2012 /CNW/ - West African Iron Ore Corp. (TSX-V: WAI) 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 m2 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
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.
SOURCE: West African Iron Ore Corp.
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