Baosteel Group Corp has struck a C$29.1 million (US$30.7 million) deal to buy a minority stake in Canada's Noront Resources Ltd, Toronto-based Noront said in a statement yesterday local time.

The deal would give the Shanghai-based steel maker access to a number of metals including nickel, used in stainless steel production.

Baosteel, through its Hong Kong-based subsidiary Baosteel Resources International Co, will pay C$17.4 million, or 86 Canadian cents per unit consisting of one share and one half of one share purchase warrant.

The private share placement will give Baosteel a 9.9 percent stake in Noront. The exercise price of each warrant was set at C$1.16 for a period of two years, and a full exercise of the warrants would increase Baosteel's equity to 14.15 percent with another C$11.7 million going to Noront.

"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," Wes Hanson, president and CEO of Noront, said in the statement.

Noront said it will use the proceeds from the offering to fund the feasibility studies on its Eagle's Nest nickel-copper-platinum-palladium deposit and Blackbird chromite deposit.

Separately, Baosteel's listed unit, Baoshan Iron & Steel Co said first-quarter net profit fell 22 percent to 3.07 yuan (US$473 million) because of higher costs for iron ore and coking coal and slowing demand.

Sales rose 22 percent to 54 billion yuan, according to quarterly results released over the Labor Day holiday.