News: RIO UPDATE 1-BSG Resources to walk away from Guinea's Simandou

(Adds quote, background)

JOHANNESBURG, Feb 25 (Reuters) - Israeli billionaire Beny Steinmetz's BSG Resources will walk away from Guinea's massive Simandou iron ore project as part of a settlement ending a long-running dispute with the African country, the company said in a statement on Monday.

The agreement, if implemented, would remove a major obstacle to the development of what is believed to be the world's biggest undeveloped iron ore deposit.

Under the deal, the two parties will drop outstanding actions related to the dispute, and Steinmetz will seek a new group of investors to develop the smaller Zogota iron ore deposit on an accelerated timetable, the statement said.

"The parties are delighted that this agreement opens a new chapter in their relationship that enables the development of a world-class mining project for the benefit of the people of Guinea," it said.

Guinea had levelled corruption allegations at BSGR and stripped it of its rights to the Simandou blocks and Zogota concession. BSG has denied wrongdoing.

Guinea government officials were not immediately available to comment.