Affero Mining has unveiled plans to divest its 38.5% stake in the Putu iron ore project located in Liberia to Lybica Holdings for $115m.

Lybica, an associate company of Severstal Resources, currently owns 61.5% of the Putu joint venture project.

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Affero Mining and its wholly owned subsidiary Mano River Iron Ore Holdings have entered into a legally binding heads of terms agreement for the planned stake sale.

Afferro Mining CEO Luis da Silva said that the divestment of its stake in Putu allows the company to focus on its 100% owned flagship Nkout project and minimises shareholder dilution.

"With the focus and cash, Afferro will be extremely well placed to enter a new and exciting phase of growth," added da Silva.

An initial cash payment of $65m will be payable to Affero on completion of a definitive sale and purchase agreement by no later than 28 February 2012, under the terms of the agreement.

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Mano may require Lybica to pay a further cash payment of $50m at any time after 30 June 2013, and two months after the delivery of a definitive feasibility study relating to Putu project.

Lybica will pay additional consideration if Putu will be sold to a third party and Afferro will be released from any further capital contribution to fund Putu from 1 January 2012.

The transaction, which is subject to shareholder and regulatory approvals, set out under the heads of terms agreement the parties plan to enter into the sale by 23 December this year.

The funds will allow Afferro to develop its wholly owned Nkout iron ore project in Cameroon.

The firm also explained that the cash enhances its own position as it is a stronger partner for Nkout.

Afferro Mining is an iron ore development company with projects in West Africa.