|
Iron ore explorer African Minerals signed a deal with China's CRM to buy a 12.5 percent stake in the firm for 152.6 million pounds to develop its flagship project in Sierra Leone.
The London-listed firm said on Wednesday the funding from China Railway Materials Commercial Corporation (CRM) would fund the first stage of its Tonkolili project.
Shares in the firm rose 5.5 percent to 441 pence by 1250 GMT after jumping 9.0 percent on Tuesday, compared to a flat UK mining index. The stock has surged by nearly 30 percent since December 14.
CRM will subscribe for about 30.5 million new shares at 500 pence each.
"African Minerals welcomes the signing of this conditional agreement with CRM, one of China's large-scale state owned enterprises and one of China's largest steel trading companies," said Chief Executive Alan Watling.
The deal includes a 20-year offtake deal under which CRM will buy between five and eight million tonnes of iron ore a year from the first stage of the mine.
The company's flagship project is Tonkolili in Sierra Leone, which contains 5.1 billion tonnes of iron ore and the firm has said the northern section of the licence area indicates the potential to increase the resource to about 10 billion tonnes.
The company expects Tonkolili, which needs a long railway line to ship the ore, to become the largest iron ore producer in Africa and one of the lowest cost producers.
Dundee Capital Markets said in a note in November the group was poised to become the world's fifth-largest iron ore producer and initiated the stock at "buy" and a price target of 650 pence. |
