African Minerals, the Aim-listed exploration group, with prospective iron ore assets in West Africa, has sold a 12.5 per cent stake in the company to the Chinese state-owned China Railway Materials Commercial Corp (CRM), a steel trading firm.
The deal, worth £152.6m, will also see CRM agree to buy between four and eight million tonnes of iron ore each year from African Minerals’ mine at Tonkolili in Sierra Leone, over at least the next 20 years.
African Minerals has been promising tie-ups with bigger partners since September last year when it issued a statement to the stock market saying the group was in talks with a number of interested parties, including “a Chinese consortium”.
Sources close to the group said that today’s deal with CRM was “strategic” and that talks were still ongoing with a number of parties regarding a corporate deal. In September, African Minerals said it was in negotiations with FTSE 100-listed Kazakh miner Eurasian Natural Resources Corporation (ENRC). ENRC refused to comment, but did not rule out a tilt at African Mineral
The company said that the proceeds from yesterday’s deal would provide the majority of the funding expected to be required for its first phase of iron ore production, while CRM has also agreed to buy 10 tonnes each of magnetite iron ore.
“African Minerals welcomes the signing of this… 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.