Rio sells African asset

Australian based resources development and investment company Gulf Resources has signed a Sale and Purchase agreement with Rio Tinto.

Australian based resources development and investment company Gulf Resources has signed a Sale and Purchase agreement with Rio Tinto for teh 100% acquisition of the Namekara Mining Operation in Eastern Uganda, Gulf said in a statement to the Australian Securities Exchange.

While specific terms of the sale with Rio have been kept confidential, the deal involves a cash consideration component of US$1 million, the company said.

The Namekara Mining Operation is located 190 km from the Ugandan capital of Kampala and is considered one of the world’s largest high grade vermiculite mineral deposits and is capable of a low cost, long life operation.

“The acquisition of the Namekara from Rio Tinto fits with our strategy to seek cash flow opportunities,” Gulf Resources chairman Scott Reid said.

Gulf chief executive agrees that the purchase represents a good opportunity for significant near term cash flow.

“The operation is capable of producing export quality vermiculite products with substantial profit margins due to the low cost nature of the operation and excellent existing infrastructure,” he said.

Gulf will inject US$500,000 of capital into the Namekara operation over the next 12 months to achieve a sustained production rate of 8,000 tonnes of vermiculite per annum, with a goal of increasing output to 25,000 tonnes per annum by 2012, the company said.

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