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Xstrata to fund Zanaga iron ore study

Republic of Congo — MININGREVIEW.COM — 04 November 2010 – Xstrata Plc – the world’s largest exporter of thermal coal “’ has agreed to pay as much as US$106 million (R731 million) to fund a pre-feasibility study for the Zanaga iron ore project in the Republic of Congo.

In a statement released here, operator Zanaga Iron Ore Company said that once the study was finished in the first quarter of 2011, Xstrata would have 45 days to decide whether to exercise an option to buy 50% plus one share in the project. Xstrata confirmed the contents of the release, but declined to comment further.

“To exercise the option, Xstrata must fund a bankable feasibility study at a cost of at least $US100 million (R690 million),” Zanaga said. “Xstrata can then opt to buy the rest of the project once the study is complete,” it added, without giving further details.

Xstrata “’ which has raised its cash offer for iron ore developer Sphere Minerals Limited by 20% to US$513 million (R3.5 billion) “’ is seeking to improve its access to supplies of the raw material as prices climb.

The average spot price for ore delivered to China, the world’s biggest buyer, was US$145/t in the first half, according to The Steel Index. That’s more than double the average US$69/t for the same period last year.


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