UPDATE 2-Samsung C&T to fund Cluff Gold in Africa

* Cluff to get an initial $20 mln loan

* Samsung C&T can buy gold at 2.25 percent discount

* Funding deal could eventually be worth more than $100 mln

* Cluff shares up 2.6 percent

By Sarah Young

LONDON, Sept 12 (Reuters) - South Korean group Samsung C&T is to fund Cluff Gold's activities in west Africa in return for being allowed to buy gold from the British miner at a discount.

Cluff will get an initial $20 million loan from Samsung C&T, which could rise to around half the estimated $200 million costs of the British group's Baomahun project in Sierra Leone.

Finance director Pete Gardner said on Wednesday the deal removed concerns over funding at a time when weak equity markets meant investors were questioning how firms which needed to raise sums for development projects were going to be able to do that.

"It takes a huge burden off our back," he said.

Cluff shares were up 2.6 percent at 0900 GMT.

The deal with Samsung C&T, a company valued at $9 billion and dwarfing Cluff's 129 million pound ($207 million) market capitalisation, is unhedged, meaning Cluff retains direct exposure to the gold price.

Gardner said that was positive for the company since he expected the price of gold to continue rising.

Gold, seen as a way to preserve value, has more than doubled in value since late 2008 when the United States first used quantitative easing as a means to encourage economic growth.

Cluff will sell 1,929 ounces of gold per month to Samsung C&T at a 2.25 percent discount to a benchmark market price the day prior to delivery.

Westhouse Securities analyst Rob Broke said the deal seemed "an attractive arrangement for Cluff as it will allow them to develop their existing projects while potentially addressing some of the capital expenditure funding concerns at Baomahun".

Cluff said it would use the $20 million to develop its Sega project in Burkina Faso, adding that, under the deal, Samsung C&T could become a cornerstone investor in its other projects such as Baomahun.