Cape Lambert arrived at the value of the royalty based on the assumption that the project will produce 2 million tonnes per annum (mtpa) in 2015-2016.

Production levels starting 2017 are expected to come down to 10mtpa while the mine life of the project has been enhanced to 30 years.

The company has appointed Deutsche Bank AG to faciliate the sale.

"The royalty is equal to US$1 per tonne for every tonne of iron ore shipped from the Mayoko Project," said Cape Lambert in a statement.

Cape Lambert executive chairman Tony Sage remarked that the company is looking to leverage the ideal opportunity to gain maximum value from this royalty.

"The sale of the royalty would allow the board to consider the payment of a special dividend to shareholders as per the Company model," said Sage.

Sage also added that the proceeds from the sale would be used to fund its other projects.

Cape Lambert had acquired the royalty for the project when it sold its 100% interest to African Iron Limited in January 2011.