Shares of iron miner Bellzone (LON:BZM) were on the rise this morning after the company agreed to sell all of its share of output from the Forecariah mine in Guinea to commodities trading giant Glencore (LON:GLEN).
As part of the offtake agreement, the Swiss commodity trader will grant Bellzone a $15 million early payment facility that becomes available once it has shipped five vessels worth or 750,000 wet metric tonnes of a 58% iron product.
Bellzone's partner in the project, China International Fund, has "tag-along" rights, which meaning it could also sell its part of the production pie to Glencore.
The agreement, which covers the life of the mine, will allow Glencore to profit from a probable expansion to 10 million tonnes. It envisages the first exports to start early in the last quarter of this year.
Bellzone's main project, the Kalia Mine, is also located in Guinea and is due to start iron ore production in 2015. Kalia is expected to produce 46 million tonnes of oxide iron ore and iron ore concentrate by 2020.
At 8:20 a.m. EDT (1220 GMT), Bellzone stock was up 6.7% at 16 pence, while Glencore shares were up 1.6% at 343.25 pence.