Resources tycoon Frank Timis, whose $3 billion mining company went bust this year, missed a royalty payment to backers who loaned him $20 million to help fund the purchase of an iron-ore mine in Sierra Leone.
The $2.57 million payment relates to eight shipments of iron concentrate from the first quarter and hasn’t been received by Cape Lambert Resources Ltd., the company said in a statement to the Australian Stock Exchange. The company won’t receive any payment for the June quarter as due to “unforeseen circumstances” the mine isn’t operating, it said.
“We remain hopeful that these issues will be resolved soon and that production will recommence at Marampa,” Cape Lambert Chairman Tony Sage said Tuesday in the statement.
Timis’s closely held company failed to make the payment to Cape Lambert, run by Australian soccer mogul Sage, three months after his Sierra Leone miner African Minerals Ltd. collapsed. The Marampa iron-ore mine, saddled with $225 million of debt, was shut in April.
Cape Lambert receives a $2 royalty for every metric ton of iron concentrate shipped from Marampa. The quarterly royalty is payable on production of 24 million tons.
Timis, chairman of African Minerals until its collapse in March, bought Marampa in November through his closely held investment company. Timis Corp. subsequently signed a deal allowing it to use African Minerals’ rail and port network to export stockpiled iron ore from the mine.
That three-month deal expired in February, according to Peter Bangura, deputy director of mines at Sierra Leone’s National Mineral Agency. The railway is now in the hands of Timis’s former Chinese partner, Shandong Iron & Steel Group, which took control of the Tonkolili project in April after African Minerals went bust. Shandong plans to reopen Tonkolili this year.
Timis Corp. said on June 5 that it still has access to the railway and sufficient funds to restart operations at Marampa. A spokesman for Timis wasn’t immediately available for comment.
The closure of Marampa for the second time in six months and the collapse of African Minerals is a blow to Sierra Leone as the country strives to overcome the Ebola epidemic that swept the country. The two mines accounted for 16 percent of gross domestic product prior to their closures and had helped fuel double-digit economic growth since 2011.