Anglo-Swiss miner and coking coal producer Xstrata has announced that it has elected to exercise its call option over Jumelles Limited (Jumelles), a subsidiary of Zanaga Iron Ore Company Limited (ZIOC) which owns the Zanaga iron ore project in the Republic of Congo.
Accordingly, Xstrata will acquire a 50 percent plus one share interest in Jumelles in return for a commitment to fund the project's feasibility study to a minimum of $100 million. The exercise of the call option is expected to complete on Friday, February 11, 2011.
Meanwhile, under the agreement with Jumelles, Xstrata could elect to acquire 100 percent of the project following completion of the feasibility study.
Xstrata's decision to exercise its call option underscores its strategy to enter the iron ore market. Taking the Zanaga project with the projects acquired as part of Sphere Minerals, Xstrata has to date secured control of a resource base of more than seven billion mt of iron ore.
The Zanaga project, which is located in the Lekoumou District of Congo, about 300 kilometers northeast of Pointe Noire, has an indicated and inferred mineral resource of around 3.3 billion mt with an average grade of 32.8 percent iron.