African Minerals turns to banks in face of weak iron ore market

 
Caitlin Morrison
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African Minerals saw its share price plunge in August (Source: african-minerals.com)
African Minerals has brought in Standard Chartered to look at the possibility of refinancing the debt structure of its Tonkolili iron ore project in the face of a “depressed iron ore environment”.

Executive chairman Frank Timis said the business had been “slow to react” to market circumstances and warned that if the business did not see a “substantial increase” in weak iron prices it would be unable to pay out dividends in 2015.

The company is also undertaking a review aimed at securing additional cash and reducing expenditure.

The group posted a $5m (£3m) decline in revenue for the first half of 2014 yesterday, although profit before tax jumped from $12m in the first six months of 2013 to $46m. Meanwhile, the company’s operating loss grew from $18m to $85m.

Alan Watling, the firm’s recently reappointed CEO, said: “Record levels of iron ore stockpiles at Chinese ports and seasonally disappointing steel demand” meant the company expected to see weak iron ore prices “for some time yet”.

African Minerals saw its share price plunge in August after a probe into the colourful Timis’ financial dealings was revealed, with one of the firm’s non-executive directors, Dermot Coughlan, standing down over the matter. However, a similar move by the chairman, whose firm Regal was fined £600,000 by the Alternative Investment Market in 2009, was deemed “unlikely” in the interim report.

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