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Sable aims to begin Guinea iron ore production by mid-2016

(Adds comment from Liberia president)

By Daniel Flynn

DAKAR, Jan 26 (Reuters) - Sable Mining aims to begin production from its Nimba iron ore mine in Guinea in the first half of next year after last week's deal to use infrastructure in neighbouring Liberia, the company's chairman said on Monday.

Jim Cochrane said the AIM (SES: E1:A54.SI - news) -listed company, shares in which soared 156 percent after Friday's Liberia announcement, expects to conclude a financing feasibility study around the middle of this year and is confident of securing the funds needed for the mine's development.

The 25-year deal with Liberia allows Sable to use ArcelorMittal (Other OTC: AMSYF - news) 's nearby rail link to the port of Buchanan, the most direct export route. Liberia said iron ore exports could begin before the end of this year, but Cochrane played down that timeframe.

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Cochrane said about $300 million would be needed to start operations at the mine, which is expected to have an annual output of 3 million tonnes, and that the company is considering options including debt and equity issues and potential partnership with another business.

He also played down the importance of a slide in iron ore prices after the benchmark 62 percent-grade ore for immediate delivery to China slipped on Friday to $65.90 a tonne, approaching its lowest level since June 2009.

"Once the feasibility study is complete, the time to production would likely be around 12 months," Cochrane said. "We are not too worried about the fall in prices ... Ore from this mine is mostly high-grade, so it will earn a premium to the 62 percent price."

Shares (Berlin: DI6.BE - news) in Sable, with a market capitalisation of 22.2 million pounds ($33.3 million), gained a further 17.5 percent by 1321 GMT on Monday.

Liberia's President Ellen Johnson Sirleaf said the deal boded well for the future after several decades of talks between Liberia and Guinea over how to cooperate on iron ore shipments.

"This is a milestone in regional integration, opening the way for stronger cooperation between our two countries and broadening the opportunities for large-scale investments," she said in a speech to the nation on Monday.

An ArcelorMittal spokesman acknowledged the steelmaker is aware of the infrastructure agreement between Sable and Liberia to use surplus rail and port capacity but said any arrangement must not have an adverse impact on its own operations.

"Any arrangements related to the existing infrastructure in Liberia will need to be made in agreement with ArcelorMittal," the spokesman said.

ArcelorMittal produces around 5 million tonnes of iron ore a year from its Liberia mine, well below the target of 15 million tonnes it had originally set for this year. (Additional reporting by Silvia Antonioli in London and James Giahyue in Monrovia; Editing by David Lewis, David Goodman and David Evans)