BURK Mining has struck an agreement with Kumba Iron Ore to use the Anglo American subsidiary’s infrastructure to load 500000 tons a year of iron ore bound for the export market.

The agreement would remain in place until Burk — a black-owned iron ore and manganese exploration and development company — had spent up to R500m to build its own facilities at its mine near Kumba’s Sishen mine, in the Northern Cape, said Iemrahn Hassen, the new CEO of Burk and former chief financial officer of junior platinum producer Anooraq Resources.

Burk would raise the money in stages and had internal capital to pay contractors extracting the ore, and the company would generate cash from iron-ore sales for early-stage work, he said yesterday.

Part of the R400m to R500m budget that Burk plans to spend at its operations will go towards a drilling programme to prove Samrec-compliant reserves and resources at the project. Samrec is the South African code for the reporting of mineral resources and is designed to give the market confidence in the veracity of firms’ mineral claims.

"We have a good understanding of the size of the resource. To produce a Samrec-compliant resource we need to do more drilling. Going to financiers without a Samrec resource statement, they will just chase us away," Mr Hassen said.

"In anyone’s language it’s a pretty good mine," he said, declining to give a figure of an in-situ resource.

Burk can produce between 30000 and 35000 tons a month and the company plans to open up new mining areas in coming months to meet the 500000-ton target.

The company had a plant that upgraded the ore to export quality and Kumba was giving assistance in ensuring standards were met, he said.

Asked about a possible listing, or how Burk proposed to raise up to R500m, Mr Hassen said: "We haven’t quite got our mind around that yet."