Reuters reported that w Shandong Iron & Steel is to pay USD 1.5 billion for a 25% stake in African Minerals flagship iron ore project in Sierra Leone and signing off on a long awaited deal.

Shandong will also purchase iron ore at a discounted price under an off take arrangement and retains the option to buy up to 25% of annual iron ore production from each of Tonkolili three production phases based on benchmark prices.

African Minerals, the largest company on London junior AIM market said in May it had negotiated improved terms from Shandong and hoped to finalize the agreement before an exclusivity period expired at the end of that month. A memorandum of understanding was announced in July 2010.

Deutsche Bank in a note said "This is extremely positive as the funding will enable the company to progress with Phase II of its expansion and to repay its debt."

Deutsche said the deal still needs Chinese government approval to proceed which it expects will take 4 to 6 months to complete, but that Shandong would not have signed off on the deal without speaking with the Chinese Government first.

(Sourced from Reuters)