Afferro Mining Inc. approves sale of 38.5% stake in Putu Iron Ore Project in Liberia to Severstal

OAO Severstal, one of the world’s leading vertically integrated steel and steel related mining companies, announces that the shareholders of Afferro Mining Inc. have today approved the sale of its 38.5% interest in the Putu iron ore project in Liberia to Lybica Holding B.V., the Company’s indirect subsidiary.

The transaction has been formally approved by the TSX Venture Exchange (TSX-V), where Afferro Mining Inc. is listed. As per the definitive sale and purchase agreement dated 23 December 2011, the transaction will be completed by no later than 28 February 2012.

The Putu iron ore project is a 13km long iron rich ridge, located only 130km inland from the deepwater shoreline of eastern Liberia. In February 2011 an independent mineral resource report estimated 2.4 billion tonnes of iron ore at 34% total Fe for the project, in June 2011 the resource estimate was increased to 3.2 billion tonnes of iron ore. A Mineral Development Agreement detailing the fiscal and legal terms for the development and mining of the Putu iron ore deposit was granted and ratified by the Government of Liberia on 9th September 2010. The Agreement term is for a period of 25 years and this can be extended further in line with the life of mine. Severstal has held a 61.5% interest in the project since 2008.

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Severstal is one of the world’s leading vertically integrated steel and steel related mining companies, with assets in Russia, the USA, the Ukraine, Latvia, Poland, Italy, Liberia and Brazil. Severstal is listed on MICEX-RTS and the company’s GDRs are traded on the LSE. Severstal reported revenue of $13,573 million and EBITDA of $3,263 million in 2010. Severstal’s crude steel production in 2010 was 14.7 million tonnes.

Afferro Mining Inc. is an established exploration and development company listed on the TSX-V (AFF) and AIM (AFF). Afferro’s portfolio includes the 100% owned Nkout iron ore project and surrounding iron ore targets in Cameroon. On 23 December 2011, Afferro has entered into a sale and purchase agreement with Lybica Holdings B.V., Severstal’s indirect subsidiary, to sell its 38.5% interest in Putu.