Due diligence over, NMDC is set to make the offer for buying stake in Greystone Mineracao do Brasil Limitada, which has mining licence area in the Brazilian state of Bahia. The company is hopeful of clinching the deal shortly.

The Chairman of NMDC, Mr Rana Som, told Business Line on Wednesday that the State-owned miner would make the offer shortly. “The deal for the stake-buy may have to be clinched within a fortnight,” he said.

Mr Som indicated that there was more than one suitor for the asset and the largest Indian iron ore miner needed to hasten the process. A UK-based mining company holds an exercisable option to buy 100 per cent stake in Greystone at a value within $150 million.

“We have taken due care to assess the project, including building of logistic infrastructure and the development of the mining asset. Now, we will make the offer,” the NMDC Chairman said. Mr Som confirmed that the technical, financial and legal due diligence work was complete. The key infrastructure-building involves laying of around 400-km-long railway line and establishing port facilities on the Atlantic coast.

The proposed mine area is understood to have reserves of 260 million tonnes of iron ore. The mine project is to be located near Caetite, a town in the north-eastern state of Bahia. NMDC has been in talks for the past four months to acquire a substantial stake in Greystone Mineracao from London-based Zamin Advisors Ltd, a private company controlled by an NRI, Mr Pramod Agarwal.

Mr Som, however, was not forthcoming on the size of the stake or on the deal value, which will include the cost of building infrastructure to develop the mines. According to industry analysts, the cost of a minority stake of 49 per cent could be around a few hundred million dollars.

Mr Pramod Agarwal's mining outfit called Zamin Ferrous, in September 2010, sold off 50 per cent of Bahia Mineracao Limitada (BAMIN), to London Stock Exchange-listed Eurasian Natural Resources plc (ENRC). His other firm Zamin Advisors Ltd now owns the iron ore assets including that in Bahia.

At the same time in 2010, ENRC also secured an option to purchase 100 per cent of the outstanding shares of Block V Ltd and Caera Minerals Ltd, which together own Greystone, from Zamin for a cash consideration at an exercise price of no more than $150 million. Greystone's mineral licence area adjoins the BMBV project area.

In June 2011, Zamin Advisors Ltd had put on hold plans to list shares in London due to increased interest from investors for possible tie-ups.

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