Bethesda, Maryland, July 1, 2013 (GLOBE NEWSWIRE) -- India Globalization Capital, Inc. (NYSE MKT: IGC) announced that it had signed a Letter of Intent (LOI) for the acquisition of a 25% interest in an iron ore mine located in Aohan Banner, Inner Mongolia and 25% of a nearby beneficiation plant. According to internal Company estimates, based on geological studies, the mine has estimated reserves of 4.17 million tons of ore with a Fe content between 20-30% and can operate for 11 months in a year. The estimated reserves are worth over $200 Million at current pricing. Production is slated to begin in early August 2013, with an estimated production level of 200 MT per day. This acquisition is immediately accretive to our P&L and balance sheet, and we expect to close the acquisition in this quarter.
The mine and the processing plant have all requisite licenses in place including a mining license, an iron ore processing license, environmental clearance and a business license. During full operations, the plant and mine employ a staff of 60 workers per shift.
IGC's 25% ownership also includes a wet magnetic separation plant located near the mine that has a capacity to produce an estimated 200 MT to 250 MT of high-grade iron ore per day. The plant takes in the 20-30% ore from the mine and produces 60% high-grade iron ore. This is then sold to the steel factories.
IGC will acquire through its Hong Kong subsidiary 25% of two companies: Aohan Banner Delin Iron Separation Limited Liability Company and Aohan Banner Hengli Mining Limited Liability Company. Aohan Banner Delin owns the mine and Aohan Banner Hengli owns the processing plant. Subject to satisfactory completion of due diligence, IGC will issue 1.35 million shares of its common stock in exchange for 25% ownership in both companies.
IGC's CEO Ram Mukunda remarked, "We expect iron ore pricing to increase in the near future, so this is an opportune time to acquire iron ore reserves and production capacity at attractive valuations. The Fe content associated with this mine is relatively high, which allows us to produce high-grade ore, through the beneficiation plant, at a much lower cost basis. We can also increase daily production from 200 MT per day to about 1,000 tons per day by expanding the beneficiation plant capacity. The LOI stipulates that each party will invest in proportion to their ownership percentage to fund the expansion."
About IGC:
Based in Bethesda, Maryland, India Globalization Capital, Inc. (IGC) is a materials and infrastructure company operating in India and China. We currently supply iron ore to steel companies operating in China. For more information about IGC, please visit IGC's Web site at www.indiaglobalcap.com. For information about Ironman, please visit www.hfironman.net.
Forward-looking Statements:
Some of the statements contained in this press release that are not historical facts constitute forward-looking statements under the federal securities laws. Forward-looking statements can be identified by the use of the words "may," "will," "should," "could," "expects," "post", "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "proposed," "confident" or "continue" or the negative of those terms. These statements are not a guarantee of future developments and are subject to risks, uncertainties and other factors, some of which are beyond IGC's control and are difficult to predict. Consequently, actual results may differ materially from information contained in the forward-looking statements as a result of future changes or developments in our business, our competitive environment, infrastructure demands, Iron ore availability and governmental, regulatory, political, economic, legal and social conditions in China and India.
The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Other factors and risks that could cause or contribute to actual results differing materially from such forward-looking statements have been discussed in greater detail in IGC's Schedule 14A, Form 10-K for FYE 2012, Form 10-Q for the quarter ended September 30, 2012 and Form 10-Q for the quarter ended December 31, 2012 filed with the Securities and Exchange Commission on December 9, 2011, July 16, 2012, November 14, 2012, and February 13, 2013 respectively.