African Minerals seeks $5-billion Chinese fund to develop Tonkolli iron ore project

AIM-listed miner African Minerals Limited (AML) is in talks with several Chinese companies to raise $5 billion to explore and develop its flagship Tonkolili iron-ore project in Sierra Leone.

Hamilton, Bermuda-based AML, which holds a significant interest in iron ore and base metals in West African nation Sierra Leone, West Africa, had been scouting for funds in recent months mainly from Asian investors to develop the Tonkolili iron-ore project.

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 10.5 billion tonnes of high grade iron ore and will require an investment of nearly $1 billion in the second phase to raise the annual iron ore production to 45 million tonnes and an additional $4 billion to raise it to 75 million tonnes eventually.

The Tonkolili iron ore is of high grade and is upgradeable to a high 70.3-per cent concentrate at a mass recovery of 26.5 per cent.

AML is willing to ship the entire 10.5 billion tones of iron ore from the Tonkolili project to China at rates much lower than what was set by the big three miners-Vale Rio Tinto and BHP Billiton in the quarterly benchmark contract price, if Chinese companies are willing to fund the exploration and development.