September 6, 2019 / 8:54 AM / 16 days ago

UPDATE 2-Mining investor Friedland clinches deal on Guinea's Nimba iron ore

* Mining investor Robert Friedland signs Nimba deal

* BHP, Newmont have been trying to divest from Nimba project

* Under the deal, Guinea’s govt increases its stake in Nimba

* Iron ore transport through Liberia not ruled out (Adds details, comments from BHP, Newmont, Orano)

By Saliou Samb

CONAKRY, Sept 6 (Reuters) - American-Canadian mining investor Robert Friedland is set to control Guinea’s Mount Nimba iron ore deposit in a deal signed by his High Power Exploration (HPX) company with the west African country late on Thursday.

Friedland, who is CEO of HPX as well as the founder and executive chairman of Ivanhoe Mines, has a long history of finding and developing remote mineral deposits in countries including Mongolia and Democratic Republic of Congo.

HPX will take over stakes in consortium company Euronimba previously owned by BHP, Newmont Goldcorp, and French nuclear group Orano, the company said in a statement.

Under the deal, HPX will give the Guinean government a 15% stake in the project through Euronimba subsidiary Société des Mines de Fer de Guinée (SMFG), as well as two seats on its board, a document seen by Reuters showed.

Financial terms of the deal were not disclosed, but the document estimated the investment by HPX would amount to $1 billion dollars.

“We are confident this project will be developed fast and well,” Guinea’s mines minister Abdoulaye Magassouba told Reuters after the signing ceremony also attended by President Alpha Condé.

“We have a world-class partner committed to developing this exceptional deposit while taking into account the environmental sensitivity of the site.”

TRANS-GUINEAN

Sources told Reuters late last month that Friedland was the front-runner to take over BHP’s 45.5% stake in Nimba. BHP had tried for years to sell its stake in the prospect, which does not fit its preference for operating in stable, developed economies.

“Following the agreement between HPX and the Government of Guinea... BHP is divesting all of its interest in the project,” a spokesman for BHP said.

Newmont Goldcorp, which also controlled a 45.5% stake, said the sale was part of its efforts to rationalise its portfolio and focus on its core business.

French nuclear company Orano, which held a 9% stake in Euronimba, said it has been turning its focus to uranium deposits.

HPX plans to bring a starter mine of one to five million tonnes per year into production “as quickly as possible” while feasibility studies are being completed for an expanded operation of at least 20 million tonnes per year, it said.

The deal did not eliminate the possibility that some of the iron ore produced at Nimba, in southeast Guinea, could be taken to port through Liberia - a much shorter route than the government’s preferred route through Guinea to the west coast.

The deal terms did, however, set out an extra tax on any iron ore taken through Liberia - of between $0.825 and $2 per tonne.

Guinea’s government has separately insisted that the future developer of its giant Simandou iron ore deposit would have to export through Guinea by building a “trans-Guinean” railway to the west coast - a distance of around 650 km.

The cost of this infrastructure has dampened miners’ enthusiasm for the project, but a government official told Reuters three large mining groups are in competition to develop two of Simandou’s four blocks through an international tender. (Reporting by Saliou Samb; writing by Helen Reid; editing by Joe Bavier/ Jason Neely and Emelia Sithole-Matarise)

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