April 3 (Bloomberg) -- African Minerals Ltd., the biggest iron-ore producer in Sierra Leone, said talks with a Chinese trader on a delayed $990 million deal are continuing and the company hopes to complete the transaction this year.
Tianjin Materials & Equipment Group Corp. of China, known as Tewoo, agreed in September to buy a 16.5 percent stake in the Tonkolili mine in a deal valuing the operation at $6 billion. African Minerals, which has a market value of $806 million, had sought to complete the sale by the end of last year.
The appointment of a new chairman at Tewoo pushed back completion, Bernie Pryor, chief executive officer of London-based African Minerals, said today in a telephone interview. The delay has coincided with a 26 percent decline in the company’s share price this year amid lower iron-ore prices.
“They have now confirmed to us that the chairman has looked at this transaction and wants to continue with the due diligence, appoint advisers and move forward,” Pryor said. “There’s been no reference by them to the change in share price.” The deal’s terms are still being negotiated, he said.
The agreement includes a 20-year sales accord for 10 million metric tons of iron ore annually. State-owned Tewoo already imports iron ore from Australia, Brazil and Indonesia. It received two trial ore shipments in the fourth quarter of last year which African Minerals today said met Tewoo’s expectations.
“Knowing the Chinese as I do, they want to make sure every step is done properly and we need to do too,” Pryor said. “I’m not going to give a timeline because I can’t guarantee a timeline.”
African Minerals today reported a net loss of $53.7 million, or 16.2 cents a share, for 2013, compared with profit of $36 million, or 10.9 cents, a year earlier, according to a statement. Sales were $869.1 million.
The company forecast exports of 16 million to 18 million tons of iron ore this year after shipping 12.1 million tons in 2013. A total of 5.3 million tons was produced in the first quarter.
It plans to expand output to 25 million tons a year starting in 2016, which may be financed by existing cash, curbing the need to raise funds from investors, Pryor said.
The stock slumped 6.8 percent, the biggest one-day decline in almost seven months, to close at 146.5 pence in London trading. The company plans to outline a dividend policy at next year’s results, it said.
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