Xstrata plc announced that it has entered into an agreement with Jumelles Limited in respect of the early stage Zanaga iron ore project in the Republic of Congo.

Under the agreement Xstrata will fund a minimum of USD 50 million towards ongoing exploration and a pre feasibility study in return for an option to acquire a 50% plus one share interest in Jumelles, the owner of the project.

If Xstrata elects to exercise the option it will fund a feasibility study and associated costs. The agreement also includes a pathway for Xstrata to acquire 100% of the project post completion of the feasibility study.

A recently completed Order of Magnitude study for the project indicates its potential to become a world class iron ore operation. The project is located in the Lékoumou District of the Republic of Congo, approximately 300 km north east of Pointe Noire. The project will continue to be managed by Jumelle’s highly experienced team led by Colin Harris, formerly Project Director of Rio Tinto’s Simandou project in Guinea.