Afferro Mining’s (LON:AFF, CVE:AFF) link-up with Korean giant POSCO underlines the quality of its assets, according to research house Edison.
Afferro revealed today it is close to sealing a deal with POSCO, one of the world’s largest iron a steel companies, that would fund the development of its assets in Cameroon.
The African arm of POSCO has signed a memorandum of understanding (MOU) with the AIM and TSX-listed miner with the aim of completing a definitive agreement in the second quarter of the year.
In a short stock exchange statement, Afferro said the accord is far broader than the group’s flagship Nkout asset and also covers the Ntem and Akonolinga prospects.
Planned investment would be made at the project level and focused on the infrastructure required to get the mines off the ground and funding needed to develop the operations.
Chief executive Luis da Silva said: "The MOU is an endorsement of the work we have undertaken to de-risk our asset base and establish a platform from which to enter the next stage of our development.
“POSCO has extensive expertise in developing iron ore projects and related infrastructure, and an existing presence in Africa, making them an ideal partner to work with us to unlock long term value from our project portfolio.
Edison said the tie-up comes shortly after a similar agreement between POSCO and Legend Mining lapsed.
Afferro’s assets tick all of the boxes in terms of scale (Nkout) and favourable location (Ntem) of that agreement with Legend said Edison.
In particular, the research house said that Ntem, which lies close to Legend’s Ngovayang iron ore project but has delivered much better exploration results, could be of special interest to POSCO.
Ntem lies only 80km from the greenfield deep water port at Kribi and 10km from a proposed rail line. A maiden JORC resource is expected in the second quarter of 2103.
Edison added that while Afferro is currently well supported by its cash holdings and modest valuation of its resource base, a formal agreement with POSCO would significantly de-risk its projects and cause the shares to re-rate further.
Shares rose 2% to 77.2p.