If the planned “strategic alliance” is formed, AIM-listed ADM will be in charge of “originating, analysing, developing, structuring and negotiating” potential projects with other parties and then will present them to Trafigura for “further evaluation”.
For any projects that Trafigura gives the green light to, the Dutch commodities trader will then provide ADM with pre-financing of up to US$100mln to acquire or develop the assets.
Specific agreements will be negotiated for any agreed projects, with both companies working to arrange any necessary debt and equity funding, while Trafigura will have exclusive rights to market whatever crude oil is produced.
Osamede Okhomina, chief executive of ADM said: “I have enjoyed a long relationship with Trafigura and this memorandum of understanding is an endorsement of the company's strategy, signalling a new stage of development for ADM.
“We have identified a number of excellent investment opportunities in Nigeria and West Africa. With our extensive network, and the potential access to capital this MOU gives to ADM, we believe the company is well-positioned to capture future opportunities,” he added.
Trafigura’s head of Africa energy trading, James Josling said: “Today's signing shows our intention to work with an upstream investing company that has strong roots in Nigeria and West Africa, and is well placed to develop its potential while being committed to practicing good corporate governance as evidenced by ADM's London quotation.”
In early morning trade, ADM shares were 17.3% higher at 4.75p.