Rio Tinto has signed a non-binding agreement with resource development company Chinaclo for the sale of its 46.6% stake in the Simandou project in Guinea.
“The Heads of Agreement sets out the proposed principal terms of the sale with the aim of signing a binding agreement within six months,” Rio Tinto said in a media statement.
“Rio Tinto will receive payments of $1.1-1.3 billion based on the timing of the development of the project.”
According to the company, the initial payment for shares will be executed at the time of first commercial production, on a per tonne basis.
The Simandou project provides access to one of the world’s largest untapped high grade iron ore resources in the world.
It can sustain a mine life in excess of 40 years and holds the potential to make Guinea one of the world’s top iron ore exporters.