Chinese company, Omai in US$46M sale agreement
Kaieteur News
December 20, 2006

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Canadian miner Iamgold Corporation announced yesterday that it has sold its stake in Omai Bauxite Mining Inc. (OMBI) and Omai Services Inc. to China's Bosai Minerals Group for about US$46M.

OMAI Bauxite Mining Inc. was incorporated in December 2004 in an ownership percentage agreement ratio of 70/30 between Cambior and the Government of Guyana.

Contacted last evening, Prime Minister Samuel Hinds, who has responsibility for the mining sector, said that he had not seen any communication to suggest that a deal had been reached.

He added that a takeover by Bosai Minerals is not unusual.

According to a press statement issued by Iamgold, under the terms of agreement with Bosai Minerals, the effective date of the transaction will be December 31, 2006.

Subsequent to a confirmatory review of the assets by Bosai Minerals, Iamgold will receive consideration of approximately US$28 million in cash from Bosai Minerals, subject to working capital and other adjustments.

The agreement is contingent on a number of conditions, including receipt of customary approvals from regulatory authorities.

According to the press release, Yuan Zhilun, Managing Director of the Bosai Minerals Group, located in Chongqing , South West China, said that the Guyana bauxite deposit is well known to the industrial minerals industry as a first-class material, and Bosai Minerals is pleased to carry on the tradition.

Last month, Iamgold Corporation completed an acquisition agreement of OBMI through a US$3 billion buyout deal with the Canadian firm Cambior Inc, which at the time controlled 70 per cent of OBMI assets.

The agreement with Cambior was aimed at boosting Iamgold to a new million-ounces-plus gold producer and for the company to become the world's tenth largest gold producer.

Cambior will continue exploring for gold at its closed mining site at Omai.

Joseph Conway, President and Chief Executive Officer of Iamgold, said that the company is pleased to have reached an agreement for the sale of the bauxite assets.

“The transaction is consistent with our strategy to focus on our core assets. We look forward to working with Bosai Minerals to finalise this transaction,” Conway stated in the press statement.

In July, OBMI suspended its operations for two months, brought on by the prohibitive cost of production of the high grade Refined Aluminium Super Calcined (RASC) ore and plummeting prices for this commodity on the world market, largely because China was selling the commodity at a cheaper price.

The steady decline of market prices forced the company to downscale production of this high grade ore from 30,000 tonnes a month to 15,000 tonnes.

A further decision was taken, in March of this year, to retrench workers, to cut back on production costs and become competitive on the international market.

Sixty-one workers have been put on the bread line since the decision was taken.

Bosai Minerals Group owns 16 plants and companies in Chongqing , Guizhou , Tianjin , Guangxi, Hong Kong, and Germany .

According to the company's website, there is a high demand for its product in Europe, North America, Japan , and India .

Its website states that output and export volumes of calcined bauxite is No. 1 in China, and the output and export volume of brown fused alumina is No. 1 in Asia, and No. 2 in the world.