China Railway Takes Stake In African Minerals

Funds Will Develop Sierra Leone Iron Ore Project

Guernsey-based exploration company, African Minerals Ltd., has signed an agreement with China Railway Materials Commercial Corp. to develop the Tonkolili iron-ore project in Sierra Leone.

Under the terms of the agreement China Railway will take a 12.5% stake in Africa Minerals in a share issued that will raise £167.8 million, according to a statement released by Africa Minerals on Thursday. The funds will enable Africa Minerals to begin the first phase of production at Tonkolili.

This is the latest in a series of Chinese overseas investments to attempt to become less dependent on the three largest iron ore producers, Rio Tinto, Vale and BHP Billiton.

African Minerals Announces Greater Iron Ore Reserves At Tonkolili

African Minerals has announced that the total JORC-compliant iron ore mineral resource at its Tonkolili project in Sierra Leone has grown to 10.5 billion tonnes. The company claims it is world's largest reported JORC compliant magnetite iron ore mineral resource. 9.7 billion tonnes of the JORC-compliant mineral resource has an average in-situ grade of 30.1% iron, with the remaining 0.8 billion tonnes grading 16.8% iron.

The company has also announced the placing of £80 million with institutional investors for the Phase 1 Hematite Development and Production Project.

Negotiations are ongoing with the China Railway Materials Commercial Corporation and African Minerals expects to execute definitive agreements with CRM in the next month for long term iron ore off-take, an investment by CRM and the procurement of equipment and services relating to the Project.

Production of Phase 1 Hematite iron ore is expected to commence in Q1 2011.