Alufer raises US$12 million to complete feasibility study for Bel Air project

Bauxite company Alufer has raised US$12 million in a private placing to complete its feasibility project at its flagship Bel Air project in Guinea and meet its cash requirements until next year.

The firm postponed its planned listing on London's AIM market because of the poor market conditions, but this fundraising allows it to remain on schedule for first production in late 2013, or early 2014.

Its chief executive Danny Keating told Proactive Investors that the firm carried out an extensive a road show across Europe, meeting with 60 different groups, but described the current fundraising market environment as "very tough".

People liked the fundamentals of the bauxite space and the project, he said, but problems had arisen surrounding the project’s valuation.

The US$12 million raised today will allow the company to complete the feasibility study of Bel Air, said Keating, who added it would "probably" fund its requirements through to March next year.

Another run at an IPO may be planned for the end of this year or the early part of next, he added. But by then the feasibility study will have been completed, and the firm is expected have more options - for example, a strategic and offtake partners.

The US$12 million placing consists of a US$6 million equity issue, based on a $95 million pre-money valuation, and a $6 million convertible loan note.

Guinea is believed to contain around a quarter of the world’s bauxite, which is a source of alumina – the primary aluminium feedstock.

Globally, bauxite demand is forecast to grow at an average of 6.9 per cent a year over the next 20 years, Alufer has previously said. And China is one of the main drivers.

Chinese demand for alumina has grown massively in recent years, with imports increasing to 45 million tonnes last year compared with just 3 million tonnes six years ago.