As part of the deal, Tewoo will also secure a 20 year offtake agreement, and together with AML it will form a joint venture to market iron ore via the major Tianjin port facilities.
African Minerals operates the Tonkolili iron ore project with a JORC compliant resource of 12.8Bnt.
The project, which currently has more than 60 years of mine-life, is being developed in a number of staged expansions.
The current project operations are anticipated to produce 20 million tonnes of iron ore per year at full capacity.
African Minerals executive chairman Frank Timis said, "Tewoo’s offer to subscribe to AML’s equity at approximately £7 per share will provide a strong endorsement of the Company’s value to the market."