Bloomberg News, sent from my iPhone.Core Mining?s Congo Republic...

Bloomberg News, sent from my iPhone.

Core Mining?s Congo Republic Iron Ore Mine May Cost $4 Billion

Oct. 7 (Bloomberg) -- Core Mining Ltd., an iron ore explorer backed by OAO Severstal, said its project in the Republic of Congo may cost as much as $4 billion and that it may consider an initial public offering to help fund its development.

The closely held company has spent $40 million on exploration at the Avima project in the central African nation and is planning a drilling program next year that may cost as much as $100 million, Chief Executive Officer Socrates Vasiliades said by phone today. Core plans to start output by 2015 at a rate of 20 million metric tons a year, he said.

Rising iron ore prices driven by surging demand for steel in China have spurred mining companies to search for new deposits in under-explored regions such as central and western Africa. Sundance Resources Ltd. and Bellzone Mining Plc are among mining companies studying similar operations in the region, while Xstrata Plc said in November it has an option to acquire 100 percent of the Zanaga iron ore project in the Republic of Congo.

?We have some good shareholders already on the registry, including Severstal, and as the project?s advancing we?re just raising capital as we require it,? Vasiliades said from London. A future IPO is ?an option, definitely, but we haven?t finalized any plans in that respect yet,? he said. Any IPO could occur before the completion of a financing study for the mine, currently expected in 2012, Vasiliades said.

Severstal, Russia?s largest steelmaker, bought a 16.5 percent stake in Core in May.

?Some Significant Names?

Severstal can invest as much as $55 million in Core by the end of 2012 under the terms of the initial investment, Core said at the time. Severstal last month agreed a 25-year plan to develop the Putu iron ore mine in Liberia for as much as $2.5 billion.

The Avima mine, port and rail project could cost between $3 billion and $4 billion, Vasiliades said. The company is also studying the development of the Kango project in Gabon where output could start in 2012, he said.

As well as financial investors, Core has received interest from mining companies and other ?strategic-type investors that can contribute to infrastructure development and port development,? Vasiliades said. The company?s in talks with potential new investors and there may be ?some significant names coming on the registry? during the next 12-18 months, he said.

An initial estimate of the iron ore resource at the Avima project is due by the end of the year and the company is targeting 500 million tons of so-called hematite ore, a premium grade to magnetite ore.

?Extremely High Grades?

Recent drilling has shown ?extremely high grades of iron,? above 65 percent, he said.

Bellzone Mining, which raised 33.6 million pounds ($54 million) in a London IPO in April, is seeking partners to develop a $4.5 billion mine, rail and port project in Guinea. Sundance Resources is studying a $3.4 billion operation in Cameroon.

Xstrata said in November it had agreed with Jumelles Ltd. to fund at least $50 million of exploration and pre-development studies in return for an option to acquire a 50 percent plus one interest in Jumelles. The accord also gave Xstrata a future option to acquire 100 percent of the project.