TORONTO, Nov. 5 /PRNewswire-FirstCall/ -- Global Alumina Corporation (the "Company") (TSX: GLA.U) today announced that it has entered into exclusive negotiations to form a joint venture to develop and operate the Company's alumina refinery project in the Republic of Guinea (the "Project"). The potential joint venture participants are BHP Billiton ("BHP Billiton"), Dubai Aluminium Company Limited ("DUBAL") and Mubadala Development Company PJSC ("Mubadala").
Under the terms of the agreement entered into today, the parties have agreed to negotiate the terms and conditions on which the potential participants would acquire shares in the Company's indirect, wholly-owned subsidiary Guinea Alumina Corporation, Ltd. ("GAC"). The parties would concurrently enter into shareholder and project management agreements governing the joint venture and the development, construction and operation of the Project and off-take agreements with respect to the remaining alumina, not already subject to off-take contracts, to be produced by the Project. BHP Billiton would be the project manager. The exclusivity period terminates March 31, 2007. The transaction, if consummated, would result in the Company retaining a one-third interest in the Project and BHP Billiton, DUBAL and Mubadala acquiring a one-third, one-quarter and one-twelfth interest in the Project, respectively.
The Company and the proposed participants have also entered into a Loan Facility Agreement pursuant to which the proposed participants (or related companies) have agreed to provide interim financing of $100 million to fund Project expenditures incurred up to the date definitive joint venture agreements are entered into. The loan will be advanced to GAC, and the facility will be fully guaranteed by the Company and GAC's parent Global Alumina International Ltd. The loan facility will be secured by a pledge of shares of GAC. If the parties are unable to agree on the definitive joint venture agreements by November 30, 2006, amounts advanced under the Loan Facility Agreement are required to be repaid prior to June 1, 2007. Amounts available under the Loan Facility Agreement will be advanced, subject to the Company satisfying the conditions precedent to draw down, to fund approved Project costs. Conditions precedent to the initial drawdown of $20 million have been satisfied. There is no assurance the Company will be able to draw down the full amount of the facility.
Each of the agreements entered into today is effective as of November 2, 2006.
BHP Billiton is the world's sixth largest producer of primary aluminium, with a total operating capacity in excess of one million tonnes of aluminium, approximately 14 million tonnes of bauxite and four million tonnes of alumina per annum. BHP Billiton is one of the world's largest non-integrated producers of primary aluminium.
DUBAL is the owner of one of the largest single site aluminum smelters in the western world. DUBAL, which is wholly-owned by the Dubai government, produces and exports primary aluminum products to more than 40 countries world-wide. DUBAL is also party to a subscription agreement with the Company dated August 10, 2005, a copy of which is available on the Company's reference page at http://www.sedar.com/. DUBAL will also maintain its right to 40% of the expected annual alumina production from the proposed refinery under its off-take agreement with Guinea Alumina Corporation, SA, a wholly-owned subsidiary of GAC, dated September 30, 2005.
Mubadala Development Company is a principal investment company wholly- owned by the Government of Abu Dhabi, with a mandate to establish new businesses and acquire (wholly or partly) existing businesses either in the United Arab Emirates or abroad. Mubadala invests in a wide range of strategic sectors including energy, utilities, health, real estate, public-private partnerships, basic industries and services.
There can be no assurance the negotiations with respect to the proposed joint venture and associated agreements will be successfully completed or that the Company or its affiliates will fulfill the various conditions precedent to borrowings under the Loan Facility Agreement. The proposed joint venture agreement will be subject to the review and approval of the Toronto Stock Exchange.
This press release has been filed less than 21 days before the entering into of the Loan Agreement. In the Company's view, this is both reasonable and necessary in the circumstances. The Company requires additional capital to continue funding ongoing development and construction of the Project and has determined that the joint venture contemplated by the agreement is its best available means to continue such funding. Due to the failure by Emirates International Investment Company LLC ("EIIC") to purchase from the Company a $50 million principal amount convertible debenture, the Company is experiencing liquidity issues. EIIC's decision to not proceed with the transaction was previously announced on June 2, 2006. The expedited closing of the Loan Agreement and the initial advance thereunder will allow the Company to continue development of the Project during the negotiation of the proposed joint venture documents.
A copy of the Loan Facility Agreement will be made available on the Company's reference page at http://www.sedar.com/.
About Global Alumina:
Global Alumina Corporation is a company that intends to use the vast bauxite resources of Guinea to produce alumina for sale to the global aluminum industry. Global Alumina is positioned to be one of the largest companies focused solely on alumina production and sales, and offers an opportunity for socially responsible investing in a country that holds over one-third of the world's bauxite resources. Global Alumina is headquartered in Saint John, New Brunswick with operations in Boke, Guinea and has administrative offices in New York, London, Montreal and Conakry, Guinea. For further information visit our website at http://www.globalalumina.com/.
Forward Looking Information
Certain information in this release is "forward looking information", which reflects management's expectations regarding the Company's future growth, results of operations, performance and business prospects and opportunities. In this release, the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate" and "expect" and similar expressions, as they relate to the Company, are often, but not always, used to identify forward looking information. Such forward looking information reflects management's current beliefs and is based on information currently available to management. Forward looking information involves significant risks and uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether or not or the times at, or by which, such performance or results will be achieved. Such forward looking information includes: anticipated timing of loan borrowings; the commencement or outcome of any negotiations with third parties; future production levels; the amount, nature and timing of capital expenditures; the timing of refinery construction and mine start up; expectations regarding the financing of the alumina refinery project and associated infrastructure and the sources of financing; prices for alumina and aluminum; operation and other costs; and business strategies and plans of management.
A number of factors could cause actual results to differ materially from the results discussed in the forward looking information, including, but not limited to: a failure by the Company or its subsidiaries to complete the preconditions to the drawdowns under the loan; the political and economic risks of investing in a developing country; the Company may not be able to secure sufficient financing; construction may be affected by costs overruns, delays, labour shortages and other construction risks; the Company's dependence on a single mining property; the possible forfeiture of the Mining Concession (as defined in the Company's Annual Information Form dated March 29, 2006) in certain circumstances; volatility of alumina and aluminum prices; operational risks such as access to infrastructure and skilled labour; the cost of resettlement of affected populations; the volatility of prices of raw materials; and all other factors discussed under the heading "Risk Factors" in the Company's Annual Information Form dated March 29, 2006. Although the forward looking information contained in this release is based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with this forward looking information. If the assumptions underlying forward looking information prove incorrect or if more of the risks or uncertainties materialize, actual results may vary materially from those described in this release as intended, planned, anticipated, believed, estimated or expected. This forward looking information is made as of the date of this release, and the Company assumes no obligation to update or revise it to reflect new events or circumstances.
