Chinese state firm to buy £153-million stake in African Minerals

AIM-listed miner African Minerals Limited (AML), which holds a significant interest in iron ore and base metals in West African nation Sierra Leone, West Africa, has entered into a deal to divest a 12.5-per cent stake in itself to China Railway Materials Commercial Corporation (CRM) for about £152.6 million to raise funds for its flagship Tonkolili iron-ore project in Sierra Leone.

Hamilton, Bermuda-based AML, which had held been scouting for funds in recent months mainly from Asian investors to develop the Tonkolili iron-ore project, has now entered into a conditional long-term agreement with CRM for a minimum of 20 years, with an option to extend it for a further five years.

In September 2009 AML had said that it was in ''advanced'' discussions with the London-listed Eurasian Natural Resources Corporation, as well as with the Central African Mining & Exploration Company for financing the project.

The Tonkolili iron-ore deposits holds an estimated 5.1 billion tonnes of high grade iron ore.

Under the off-take agreements, CRM will purchase between five and eight million tonnes per annum of hematite iron ore from AML's first stage of production at Tonkolili for a minimum of 20 years, expected to commence by 2011.

The Chinese State-owned company will also purchase a minimum of 10 million tonnes per annum of magnetite iron ore production from AML's second stage of production at Tonkolili for a minimum of 20 years, expected to commence by 2013.