News

March 03, 2009

Baobab Resources Has Forged A Long Term Relationship With The IFC On Its Iron Ore Project In Mozambique

By Charles Wyatt

Deals can take a long time to gestate, so it’s no particular surprise to learn from Jeremy Dowler, chairman of Aim-traded Baobab Resources, that it took the best part of a year for his company to come to terms with the International Finance Corporation (IFC), the investment arm of the World Bank. In fact, talks started at Indaba in February 2008, but it wasn’t until January of this year that the company announced that the IFC had formally decided to enter into a joint venture with Baobab on the company’s Tete iron ore project in Mozambique. The IFC will acquire a 15 per cent interest in the project for US$400,000 and will then commit US$330,000 to the 2009 exploration budget as a pro-rata contribution. Baobab will put up the rest of the money for this exploration budget and will operate the project.

Only three weeks after the announcement on Tete, Baobab further announced that IFC had also acquired 11 million shares at 4.1p each in the company, and thus injected a further £451,000 into the coffers of Baobab. The IFC now holds 11.45 per cent of the equity, as well as 7.3 million options at 6.15p per share which can be exercised up until the end of January 2016. It is a credit to the company that such an august institution has become involved, but there must have been some sweaty moments as...