South African mining firm Exxaro Resources has made an offer worth up to A$338m ($349m) to buy a controlling stake of African Iron, targeting the latter’s Mayoko iron ore project in the Republic of the Congo.

As per the agreement, Exxaro will pay up to A$0.57 a share to all African Iron shareholders if the South African firm acquires 75% or more of the fully diluted share capital.

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Exxaro is also offering up to A$0.31 cash base consideration for each listed African Iron option as per the deal, which is open for acceptance until 14 February 2012. Exxaro CEO Sipho Nkosi said African Iron’s assets provide an excellent match to their stated objective of gaining operational exposure in iron ore.

“African Iron represents a reasonably sized opportunity, which will allow Exxaro to leverage its bulk commodity and iron ore expertise,” Nkosi said.

“At the same time the offers allow African Iron shareholders the opportunity to realise an attractive cash price at a considerable premium to the market value.”

A pre-bid agreement has also been reached between Exxaro and African Iron’s largest shareholder Cape Lambert Resources, under which Cape has agreed to accept the offer within five days of the offer opening. Exxaro said the acquisition is expected to help them extend their exposure in iron ore and believes it will provide them with an attractive platform for further growth in the commodity.

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The firm has already received Australia’s Foreign Investment Review Board and all necessary South African regulatory approvals for the acquisition, which will be funded with the company’s cash reserves and existing debt facilities.

African Iron holds 92% interest in the Mayoko iron ore project, which has a Joint Ore Reserves Committee (JORC) compliant mineral resource of 121 million tons of iron ore, consisting of a hematite cap of direct shipping ore (DSO) at 55% Fe and beneficiable DSO ore at 41% Fe.