Shares in Sable Mining Africa (LON:SBLM) surged as its subsidiary, West Africa Exploration, signed a deal with the Liberian government, paving the way for iron ore from its flagship project in south-east Guinea to reach the West African coast.
The contract allows the company to use a rail line which runs from Yekepa, 30km from the firm's flagship Nimba mine project, down to the Port of Buchanan 300km away in Liberia.
News of the deal broke on Friday, with shares rocketing 300%, and there were 30% gains today with Sable chief executive Andrew Groves describing the contract signing as a “momentous occasion.”
"The significance of the IDA [infrastructure development agreement] will be felt across the West African region, as it paves the way for the development of Mount Nimba which, when in production, will generate significant revenue, employment opportunities and tax income,” he said.
As part of the deal, Sable will have to rehabilitate and expand the railway.
The total investment in the project, including the rail infrastructure, was valued at about US$1.3bln over 25 years.
Sable will invest US$300mln in the first five years of its initial programme and thereafter US$1bln in the remaining years of the operation.
Meanwhile, as part of the agreement, West Africa Exploration - 80% owned by Sable - would make a yearly contribution of more than US$2.5mln to the Liberian government for a social fund.
It would also pay a variable yearly concession fee for the transhipment of iron-ore products through Liberia ranging from US$1.5mln to $5mln a year.
Sable shares advanced 25% to 2.5p.