May 2 (Reuters) - China's Baosteel Group picked up a 9.9 percent stake in Noront Resources Ltd in a deal that would give the Canadian miner funds to develop its projects, sending Noront shares up 12 percent.
Baosteel Resources International Co, a unit of the world's No.3 steel producer in terms of output, will pay C$17.4 million ($18.4 million), or 86 Canadian cents per unit consisting of one share and one warrant, Noront said in a statement.
The exercise price of each warrant was set at C$1.16 for a period of two years after closing and a full exercise of the warrants would raise Baosteel Resources stake to 14.15 percent.
Noront said it would use the proceeds to fund the feasibility studies on its Blackbird chromite deposit as well as the Eagle's Nest nickel-copper-platinum-palladium deposit -- both of which were subject to due diligence by Baosteel.
"Baosteel's intended investment represents the initial step in a potential long-term partnership that provides Noront access to one of China's largest steel producers and China's rapidly expanding stainless steel industry," Noront's Chief Executive Wes Hanson said.
Shares of the company, which have fallen 14 percent so far this year, were up 6 percent at 89 Canadian cents in brisk trading on the Toronto Venture Exchange. They earlier touched a high of 94 Canadian cents. ($1 = 0.945 Canadian Dollars) (Reporting by Savio D'Souza in Bangalore; Editing by Gopakumar Warrier)