Why Sable Mining Africa is up 344%

Rumours that Sable Mining Africa is on the cusp of signing a $1.3 billion (£868.3 million) iron ore transhipment deal with the Liberian government flew around the market on Friday, rocketing the iron ore producer's share price up by as much as 344% to 3.46p.

The deal is crucial for Sable's primary project, the Mount Nimba iron ore development in south-east Guinea, and confirmation will take it one step closer to profits, potentially helping the share price back to levels seen last year.

From a government press meeting, news service GNN Liberia reported that the 25-year deal will allow Sable to ship its ore through Liberia if the miner invests $300 million in the first five years of the initial programme. The remaining $1 billion will be invested later on in the Infrastructure Development Agreement, which will allow Sable construct a route from Guinea to Port Buchanan in Liberia via rail.

"When the agreement is finally concluded by the National Legislature, West Africa Exploration SA will commence operations in latter 2015," National Investment Commission executive director George Gyude Wisner is reported to have said. West Africa Exploration is a joint venture between Sable Mining Africa and its Guinean based partner Nimba Mining.

In a statement, Sable confirmed that it is in advanced discussions with the Government of Liberia and the Government of Guinea, adding that it would make any further announcements as appropriate. When called by Interactive Investor, the miner was unable to confirm or deny the figures in the news report.

The Nimba project has a maiden JORC reserve of 53.96 million tonnes (Mt) at a grade of 61.6% iron and a mineral resource of 181.8Mt at an in-situ grade of 58.8% FE. Management called its projected capex "modest" at $299.3 million last month, thanks to the mine's high grade DSO material, it having virtually no strip ration and its proximal infrastructure.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.