Chinese mining firm Jinchuan has acquired 70 percent stake in Tiomin Kenya Limited (TKL) in a bid to revive the titanium mining project located in Kenya's coastal region.

A statement from the Canadian-based mining firm, Tiomin, received here Wednesday, said Jinchuan acquired the controlling equity interest in Tiomin Kenya, a wholly owned subsidiary of Tiomin that owns 100 percent of the Kwale Mineral Sands Project in Kenya.

The investment agreement which was signed on Monday offers Jinchuan a 70 percent stake in Tiomin Kenya Limited, leaving the Canadian parent with 30 percent.

The statement said Jinchuan is expected to immediately invest 25 million U.S. dollars into the mining project to offer it the financial muscle it needs to take off.

"Tiomin Resources is pleased to announce that it has taken a significant step forward and signed an Investment Agreement with Jinchuan Group Limited, one of China's largest companies," the statement said.

The Canadian and Chinese firms hope to mine an average of 330, 000 tonnes of titanium-bearing ilmenite, 77,000 tonnes of rutile and 37,000 tonnes of zircon a year from the Kwale Mineral Sands site.

The statement said all net cash flow generated by Kwale will be used initially to repay project debt and thereafter net free cash flow will be distributed pro-rata 70 percent to Jinchuan and 30 percent to Tiomin.

"The transaction is expected to close in about two months and is subject to regulatory and shareholder approval," the statement said.

Jinchuan is China's biggest nickel producer and fourth-largest copper producer.

"Closing this flagship deal, which has had such a long and painful gestation period, will be a key event for Tiomin. We believe that the closing conditions can be met in the next two months," said Robert Jackson, CEO of Tiomin.

He said a 30 percent carried interest in a good project for no further investment is highly valuable to Tiomin particularly given the potential upside of higher commodity prices and exploration success.

"Investors should look at this transaction in the context of the enormous benefit to Tiomin of Jinchuan's ability to obtain project financing to construct the project," Jackson said.

"In addition, closing this transaction with Jinchuan will give Tiomin more flexibility to pursue its strategy of leveraging its strong cash position and management team to find and execute an accretive, company-making transaction."

(Xinhua News Agency September 2, 2009)