African Minerals Ltd., building a $1.2 billion iron ore project in Sierra Leone, climbed the most in more than two months in London trading after completing an investment accord with Shandong Iron & Steel Group Co.
The stock rose as much as 6.9 percent, the biggest intraday gain since May 31. Shandong will invest $1.5 billion for a 25 percent stake in the Tonkolili iron-ore project in Sierra Leone, London-based African Minerals said today in a statement. The two struck an initial accord for the investment in July last year.
“This is extremely positive as the funding will enable the company to progress with phase two of its expansion and to repay its debt,” Deutsche Bank AG analysts Rob Clifford, Grant Sporre and Gaetan de Buyer wrote today in a report. “The announcement represents a point of de-risking and is one of the multiple catalysts that we had expected for the stock.”
African Minerals rose 6.5 percent to 660 pence by 8:47 a.m. in London after touching 662 pence. It’s up 56 percent this year and has a market value of 2.2 billion pounds ($3.6 billion).
The investment needs Chinese regulatory approvals and includes discounted iron ore sales from the Tonkolili mine, African Minerals said. The Chinese company will purchase 2 million metric tons of the steelmaking raw material a year from the first stage of the project, it said.
The next two stages of expanding the mine will cost about $8 billion, a June presentation from African Minerals shows.