South African mining company Exxaro is set to buy African Iron, an Australian-listed company with iron ore operations in the Republic of Congo, for about $388 million.

The news boosted African Iron shares by 35 per cent, up 14 cents to 54 cents at 1113 AEDT.

The two companies have signed an implementation agreement for the takeover, and a major African Iron shareholder is likely to accept the offer.

Exxaro said acquiring African Iron’s projects in the Republic of Congo would help it meet its ambitions of developing a significant iron ore asset in the rapidly emerging west African region.

Exxaro has offered 51 cents for each African Iron share, but will pay 57 cents per share if able to acquire 75 per cent or more of the total shares.

The higher price values African Iron at about $338 million.

Cape Lambert Resources, which holds 20 per cent of African Iron’s shares, has signed a pre-bid acceptance agreement with Exxaro.

The Foreign Investment Review Board has already approved the potential deal, and South African regulatory approvals have also been received.

Exxaro’s offer is open to African Iron shareholders until February 14.