Mining developer Global Alumina strikes joint venture deal, widens annual loss

TORONTO (CP) - Global Alumina Corp., a Canadian company developing a major alumina refinery project in the Republic of Guinea in western Africa, has struck a joint venture deal to sell two thirds of the project to an international group for US$260 million in a move to get the company out of "serious financial difficulty."

The announcement late Monday came after the company reported its 2006 net loss widened to US$19.5 million or 10 cents a share versus US$17.3 million or 14 cents for the previous year.

In a release after stock markets closed, Global Alumina said it had approved agreements to form a joint venture to develop and operate the proposed refinery project.

The company will sell two thirds of the project to global mining giant BHP Billiton, as well as Dubai Aluminium Co. Ltd. and Mubadala Development Co., an investment firm owned by the Abu Dhabi government, for about US$260 million.

The transaction will enable the company to continue developing the project under the investment and concession agreement with the Guinea government signed in 2004.

"The joint venture to be established by these agreements is one of Global Alumina's most exciting developments in its quest to construct the world's largest green-field alumina refinery in Guinea," said Bruce Wrobel, CEO of Global Alumina.

Wrobel said the joint venture deal adds "the financial and management resources of BHP Billiton, Dubal and Mubadala, as well as Dubal and Mubadala's significant need for alumina driven by their aggressive aluminium smelter growth plans and BHP Billiton's strong technical and operational expertise" to Global Alumina's project development team in Guinea.

Earlier Monday, Global Alumina said its board determined that the company was in "serious financial difficulty" and needed the joint venture to improve its financial condition.

In its earnings report, Global Alumina reported no product revenues as the company moved to develop its Guinea refinery project.

In financial developments, the company reported:

-Construction-in-progress spending rose by US$116.5 million to $192.3 million at the end of 2006, compared with $75.8 milion at the end of 2005.

-It received $37.2 million through warrants exercised in 2006 bringing the total equity raised to date to about $248 million.

Global Alumina, which reports in U.S. dollars, is trying to develop the bauxite resources of Guinea, a country with a third of the world's supply of the mineral, to produce alumina for sale to aluminium producers.

Alumina is a powdery substance used to smelt aluminum, a lightweight metal used in packaging, aerospace and other sectors.

Global Alumina is headquartered in Saint John, N.B., with operations in Boke, Guinea and administrative offices in New York, London, Montreal and Conakry, Guinea.

The company's shares were halted most of the day Monday pending news. Before the halt, Global Alumina stock rose eight cents to $1.28, a gain of 6.7 per cent.