IMIC signs Chinese big hitter as it looks to commercialise iron ore deposit By Ian Lyall September 02 2013, 3:50pm
Chinese partner: Hebei is a very good first step towards that goal. It produces 50mln tons of iron and steel for a hungry domestic market, and has an interest in tying up future supplies of ore.Chinese partner: Hebei is a very good first step towards that goal. It produces 50mln tons of iron and steel for a hungry domestic market, and has an interest in tying up future supplies of ore.
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International Mining & Infrastructure Corporation (LON:IMIC) has revealed that China's largest iron smelter has signed up as a potential partner to help it unlock the potential of the Nkout iron ore deposit in Cameroon.
The state-owned Hebei Iron and Steel Company is now part of a strategic collaboration agreement with China Railway Materials Company (CRM), IMIC and partner African Iron Ore Group (AIOG).
Trading firm CRM's role was to "consolidate Chinese off-take support for IMIC and AIOG projects" - effectively to find potential buyers of Nkout's iron ore.
Hebei is a very good first step towards that goal. It produces 50mln tons of iron and steel for a hungry domestic market, and has an interest in tying up future supplies of ore.
For all this to go ahead, IMIC must first complete the acquisition of Afferro (LON:AFF), the London and Toronto-listed owner of the deposit.
Afferro shareholders will vote on the US$200mln deal on September 16.
IMIC chairman Haresh Kanabar said: “I am delighted by this agreement between IMIC, AIOG, CRM and Hebei in connection with the Nkout Project.
"The agreement underlines our ability to implement an off-take solution for this substantial iron ore asset, which we look forward to developing following our proposed acquisition of Afferro.
"IMIC will make an optimal use of these partnerships with companies of the size and stature of CRM and Hebei Steel."
The share price rose 3% at 29.7p and is up 15% in the last six months.
Natural Resources boutique SP Angel said: “The agreement goes to highlight interest in iron ore from the west of Cameroon and could become an important part of a financing package to enable the construction of a suitable rail road from the Nkout project to the coast.”
Ocean Equities, meanwhile, describes the collaboration agreement as an “extremely important catalyst” for IMIC’s African iron ore development strategy.
“To have the support of the largest Chinese state-owned steel producer reiterates high level Chinese support for IMIC and AIOG’s acquisition of Afferro and their wider term iron ore strategy,” said analyst Adam Lucas.
“Off-take financing is going to play a crucial role in the financing of IMIC and AIOG’s infrastructure projects.
“This agreement with Hebei illustrates that AIOG and IMIC have already began the process of rapidly advancing their development strategy through the offtake support process.”
