Iron ore firm Bellzone Mining Plc signed a deal with a Chinese group to build a railway and a port facilities in Guinea, where it is developing a mine.
Bellzone shares in London surged 59 percent to 55 pence by 1200 GMT compared compared to a 0.4 percent fall in the UK mining index.
“In one giant step for shareholders, Bellzone management has brought the Kalia iron ore project right to the front of the potential new iron ore producers and well ahead of many still grappling with infrastructure issues,” analyst Damien Hackett at Canaccord Genuity said in a note.
Under the deal, China International Fund Ltd (CIF) has agreed to pay about $2.7 billion for infrastructure required for Bellzone’s Kalia project, including a 286-km railway, bulk storage facilities, port facilities and power supply.
Hong-Kong-based CIF will get the right to buy all of the production of the Kalia project and will also get 50 percent of the Kalia II deposit and all of the Faranah exploration permit.
In December, Guinean sources told Reuters that CIF had paid Guinea $100 million to guarantee a mining deal.
China, the world’s biggest consumer of metals, has stepped up deals with miners globally to ensure a steady stream of raw materials for its resource-hungry infrastructure programme.
The transport project will be the first leg of a multi-user railway, Guinea’s Minister of Mines Mahmoud Thiam said in a statement.
“This creates the most strategic link of the transport network required to unlock Guinea’s iron ore potential.It puts two mines on line within four years instead of one and multiplies annual mining revenue tenfold in a short time.” Bellzone plans a two-staged development, with 20 million tonnes of annual output by 2014, ramping up to 50 million tonnes by 2018.
The Kalia project has an inferred magnetite resource of 2.4 billion tons. (Reuters)