The local iron ore and manganese product developer has subscribed for a 19.9% interest in Australian-based exploration company IronRidge Resources.
Assmang, owned jointly by Assore and African Rainbow Minerals (ARM), announced the deal to invest in IronRidge on Tuesday, motivated by the company’s current exploration of its iron ore prospecting licences in Gabon.
The completion of the £11.7 million (R208 million) equity interest transaction is subject to the fulfilment of certain conditions, including a capital raising of £25 million and the admission of IronRidge to the Alternative Investment Market (AIM) on the London Stock Exchange by 30 June.
Upon completion of the deal, Assmang will also nominate one non-executive director to IronRidge’s board of five.
IronRidge Resources is controlled by Australian-listed exploration company DGR Global, and holds the Tchibanga, Tchibanga North and Belinga Sud licence areas in Gabon, covering some 5352km2.
The first two licence areas are situated about 60km from the coast of the Mayumba port, while the Belinga Sud licence area lies within 140km of Booue town on the Trans–Gabon railway.
DGR Global said Assmang would be a “strong cornerstone investor” for IronRidge’s IPO, and extend DGR’s international reach. After the deal goes through, DGR Global’s 45.8% stake in IronRidge will be reduced to 26.4%.
While exploration activities are still at an early stage, Assmang believes the Gabon exploration sites could potentially create “world class iron ore mining projects”.
“The ARM and Assore Boards of Directors however believe in the long-term potential of IronRidge. Its interest in the company offers Assmang exposure to some of West Africa’s promising iron ore opportunities and could facilitate Assmang’s long-term access to high grade iron ore with competitive capital and operating costs,” the company said in a statement.
Assmang added that the investment forms a key part of ARM and Assore’s objectives to evaluate and develop long-term strategic investments on the African continent and elsewhere.
IronRidge parent company DGR Global said in a release that Assmang was both a strong investment and support partner, with its track record in mine development and operations being a key asset in helping to back IronRidge’s programmes.
DGR Global CEO and IronRidge executive chariman Nick Mather said: “…the deal with Assmang will equip IronRidge with support, subject to exploration and ongoing technical success, through the evolution of IronRidge from explorer to developer, which is where we want to go.”
Both DGR and IronRidge believe that Africa offers several strategic advantages for mineral exploration generally and iron ore explorers specifically.
They consider Gabon to be at the forefront of a trend that is seeing increased improvements in security and ground access on the continent. The Gabonese government, for example, recently committed to a $14 billion upgrade of infrastructure including road, rail and port facilities.
Other advantages include Gabon’s mineral profile, with persistent wet tropical environments enriching the near surface iron profile, forming thick iron ore caps over the iron-rich substrate.