The US$15 million transaction initially scheduled for closing on February 28 this year between Afferro Mining Inc. and OAO Severstal that was postponed for a month due to a claim by Liberia’s Ministry of Finance to 15% tax on the transaction, is experiencing further delays due to “on-going discussions” the two companies are having with the Ministry to iron things out. According to the Dow Jones Newswires, the companies said Monday that they have agreed to delay the closing of Afferro’s sale of its 38.5% minority interest in Severstal Liberia Iron Ore Ltd to Lybica Holding B.V., an affiliate of Severstal, due to ongoing tax discussions with the Republic of Liberia’s Ministry of Finance.
So far, it appears that neither Severstal nor Afferro believe that such a tax is payable, as advised by their tax consultants. This advice is consistent with the advice obtained by the parties prior to entering into the Transaction.
Representatives of both companies continue to work to resolve this matter in a prompt manner and as a result have amended the share purchase agreement to provide an outside closing date of April 4. Meanwhile Afferro shares have risen 9.4% on news of the revised deadline.