13 May 2010 12:31

Severstal buying stake in Congo, Gabon iron ore miner

MOSCOW. May 13 (Interfax) - Severstal is buying a stake in Core Mining Limited, which develops iron ore fields in Congo and Gabon, the Russian steel major said in a statement.

Severstal will buy an initial 16.5% of the company, but plans to increase its investment in time.

Core controls exploration licenses for the Avima iron ore deposit in the Republic of Congo (Brazzaville) and the Kango iron ore deposit in the Republic of Gabon.

The initial investment will be used to fund Core's exploration program for both projects. The transaction is expected to be completed in May 2010. Severstal has the option to make further investments in Core in 2011.

Both projects are at an early exploration stage. Avima has a multibillion tonne resource target with grades that are greater than 50%Fe. Drilling to date has indicated high grade mineralization of up to 69.75% Fe to a depth of up to 180 m. The preliminary (non-JORC) resource evaluation is 500 million tonnes, including a minimum of 100 million tonnes of direct shipping ore (DSO, 60+%Fe). Based on an independent third party technical assessment of the exploration data currently available, Avima is expected to contain between 500 million tonnes to 1,000 million tones of iron ore with significant upside potential.

Early exploration on the Kango project showed significant elevated magnetic responses of over 30km on 60km anomaly. The project is conveniently located near the coast and existing infrastructure. The project is believed to have early production potential.

The resource figures for both projects will be updated in the course of the planned exploration in 2010-11.

"The acquisition of a stake in Core Mining is part of our strategy to build a portfolio of world class exploration assets in steel-making materials that will be logistically beneficial for our target markets in Europe, North America and Asia," said Boris Granovsky, Head of Strategy and Business Development of Severstal Resources, Severstal's mining division.

"We are pleased that Severstal has made the investment into Core Mining. Severstal's support underscores the high quality of our assets and as we look to advance our projects we will continue to assess strategic opportunities to finance them through to production. Core has a world class project pipeline and we look forward to progressing exploration work on both licenses in due course," said Socrates Vasiliades, CEO of Core Mining.

Core Mining Limited is a private company registered in the Isle of Man focused on the exploration, development and operation of iron ore projects in Central and Western Africa.