African Minerals has sealed a second investment deal with a Chinese group for its flagship iron-ore project in Sierra Leone, selling a 25% stake to Shandong Iron and Steel for $1,5-billion.
In January, the London-listed company inked a £153-million deal with the China Railway Materials Commercial Corporation — one of the country’s largest steel trading companies — to help fund the first stage of the Tonkolili project.
News of the latest deal, which involves a three-stage investment and an agreement for Shandong to buy 10-million tonnes of iron ore per year at discounted prices, sent shares soaring 19,5% by 7.14am GMT.
“When completed, this strategic investment will enable us to accelerate the development of Tonkolili,” executive chairperson Frank Timis said in a statement on Tuesday.
The investment will allow the firm to boost production from the first phase of the project to 10-million tonnes a year from eight million tonnes, the firm said.
It will also speed up the launch of the second phase to the fourth quarter of 2012.
The new funds will allow an improvement in the planned infrastructure so that all transport will be on rail, instead of a mix with road haulage.
This means that there will be “uninterrupted year-round shipment, unaffected by the wet season”, the company said. — Reuters