Iron ore mining company African Minerals has initiated the shutdown of its Tonkolili iron ore operation in Sierra Leone, as the company does not have sufficient working capital.
The Tonkolili iron ore project is developed, operated and 75%-owned by the company.
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According to African Minerals, operations will be put on care and maintenance until the $102m of restricted cash is released or the company secures short-term funding.
The cash has yet to be released due to continued disagreements between the company and Shandong Iron and Steel Group (SISG).
Previously, the company announced its intention to sell down a partial interest in its stake in the Tonkolili mine, and is in talks with several groups regarding this.
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With all available funds being used for the security and safety of personnel, as well as assets during the temporary shutdown process, African Minerals subsidiaries have been unable to secure the full repayment under the PXF facility, which is due at the end of November.
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By GlobalDataAfrican Minerals CEO Alan Watling said: "Initiating a temporary shutdown of operations towards care and maintenance in Sierra Leone, while extremely regrettable, is a necessity given the company’s financial status and uncertainty over the timing of the release of the restricted funds.
"While the operating performance of the project has been impressive during 2014, with Q3 exports of 4.4 million tonnes (Mt) at an average direct cash cost of $36/t, in spite of the wet season, the fall in iron ore prices and the operational challenges caused by the Ebola disease outbreak has meant the project has continued to operate at a loss."
African Minerals executive chairman Frank Timis said: "We have allocated all available funds to these critical activities and to keeping the operating assets in a condition that operations can be quickly restarted, which is of fundamental interest to all stakeholders."
Image: New locomotives arriving in Sierra Leone. Photo: courtesy of African Minerals.
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