UPDATE 1-Kazakh miner ENRC mulls African Minerals bid

* AMI has world's third-largest magnetite ore deposit

* Tonkolili project needs $2.6 billion investment

* Evraz placing raises hopes for more convertibles

(Adds further details, background)

By Olga Popova and Melissa Akin

MOSCOW, July 10 (Reuters) - London-listed Kazakh miner ENRC (ENRC.L) is considering a bid for Sierra Leone-focused African Minerals (AMIq.L) and has been discussing the issue of a convertible bond, banking sources said on Friday.

"They are interested in AMI (African Minerals), which recently discovered the world's third-largest (magnetite) ore deposit," one of the sources said.

London based spokesmen for both African Minerals and ENRC declined to comment on the possibility of a bid.

African Minerals "is focused on accelerating the development of its Tonkolili iron ore project in Sierra Leone," the African Minerals spokesman said.

"We are not currently looking at a convertible bond," ENRC's London based spokeswoman said.

African Minerals was worth about 430 million pounds ($699 million) on the stock market as of Thursday's close. It was up 9.35 percent at 251.5p at 1357 GMT on Friday, after standing less than 1 percent higher for most of the session.

Earlier this month it sold 25.5 million shares at 250p each.

Its main asset is the Tonkolili project, with the third-largest magnetite ore resources in the world and estimated investment needs of $2.6 billion, including the cost of infrastructure and a deep water port.

ENRC, the world's largest ferrochrome producer, has a market capitalisation of 8.5 billion pounds ($13.82 billion) and had nearly $2.5 billion in cash and cash equivalents on its balance sheet at the end of 2008.

Bankers said convertible bonds would receive wide consideration by miners in former Soviet countries after London-listed steel maker Evraz (HK1q.L) raised $900 million this week in a combined equity and convertible offer, of which its core shareholders bought $400 million.

The Evraz convertible bond, which made up two-thirds of the total fundraising, carried a 7.25 percent coupon, which bankers viewed as an attractive rate. ($1=.6150 pounds) (Editing by Greg Mahlich)