Tanzania will soon start exploiting its nickel deposits in Dutwa, in the northern part of the country, with the injection of $5 million into the project by the International Finance Corporation.

The money will go towards concluding a feasibility study of the project. In return, IFC — the private sector arm of the World Bank Group — will take up a 10 per cent stake in African Eagle Resources, the mineral development firm behind it. The study is scheduled for completion by the end of 2012.

The IFC has already signed an equity subscription agreement with African Eagle Resources, a UK-incorporated company that discovered the nickel deposits in 2008. This will culminate in the issuing of 45,509,570 ordinary shares in the company to IFC.

In a statement, the firm said: “For every two new shares subscribed for, IFC will receive a warrant to purchase one further share at a price per share of 150 per cent of the placing price, exercisable for four years. Accordingly, on closing of the placing, IFC will hold 22,754,785 share purchase warrants”.

The agreement also gives IFC a pre-emptive right to participate in any future equity or equity linked financings in order to allow it to maintain its 10 per cent ownership in the firm.

“African Eagle has agreed publicly to disclose any material payments to the Tanzanian government, as per IFC’s requirements,” it added in the statement.