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Miner African Minerals outlines financial recovery plan

* Plans to boost exports, reduce costs

* Says Tonkolili to be cashflow positive by end 2014

* Says projects still unaffected by Ebola outbreak (Updates with analysts comments)

By Silvia Antonioli and Esha Vaish

LONDON/BANGALORE, Sept 19 (Reuters) - Miner African Minerals plans to boost revenues by reducing discounts and requiring a premium on some of its iron ore, the company said on Friday, as part of a recovery plan aimed at shoring up its battered finances.

The West Africa-focused iron ore miner has come under heavy pressure this year, hit by a 40 percent drop in the iron ore price and an Ebola crisis that has affected the broader region. African Minerals said in Friday's statement that its projects remained unaffected by the epidemic.

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Friday's announcement lifted the stock as much as 12.5 percent. The shares were up 7.2 percent at 26 pence at 0909 GMT.

Under the plan - presented by chief executive Alan Watling and approved by the company's board - African Minerals said all future shipments would be sold at a fair market price, adding it was supported by its main buyer and partner, China's Shandong Iron and Steel Group (Shandong).

The company said it aims to ensure its sole project, Tonkolili, generates positive cashflow by the end of 2014.

"They've got some chance of a reprieve," Investec (LSE: INVP.L - news) analyst Hunter Hillcoat said.

"But while the operation may be cashflow positive that doesn't suggest the company will become cashflow positive. And even if it is, it doesn't provide the company with the cashflows to support the second phase expansion - and that's critical to the long-term survival of the company."

Last month, the company agreed with Shandong, the partner on Tonkolili, that it would get immediate access to $248 million in cash that was previously earmarked for the second phase of the mine's expansion.

African Minerals said it has already drawn $82 million from this fund, used primarily as working capital, and is planning to draw a further $161 million in September and October for essential payments and to cover operating losses and debt repayments until the project becomes cashflow positive.

"The work currently underway.... leads me to expect that this project will become cashflow positive, assuming that the iron ore price environment remains broadly unchanged, by the end of this year," Watling said in Friday's statement.

The company will publish its half year financial results and an update on the re-financing progress on Sep 30.

"It's really about the next six months. Shoring their balance sheet up and delivering on key production and cost targets is critical in insuring that this actually becomes a sustainable business over the long-term," Macquarie analyst Alon Olsha said.

"Failing that, the company will struggle to remain a going concern."

African Minerals reiterated its production guidance of 16-18 million tonnes for 2014 and said operations at its project in Sierra Leone would see no material impact from a three-day countrywide lockdown intended to help curb the spread of Ebola. (Editing by Gopakumar Warrier and Clara Ferreira Marques)