India's third-largest steelmaker JSW Steel is nearing a deal to buy embattled West African iron-ore miner London Mining, a source with direct knowledge of the negotiations said on Friday.

"JSW is very close to a deal. It is almost 100% done," the source said.

Two other sources with knowledge of the situation confirmed the miner was days away from securing a deal with a strategic partner, but did not name JSW.

Spokesmen for the two companies could not immediately be reached for comment.

London Mining's shares have crashed 96% this year as the firm battles high costs, a sharp drop in iron ore prices and the impact of the Ebola virus on the region. The stock more than tripled on Friday on hopes of an imminent deal, trading up 235% at 5.2 pence in afternoon trade.

At Thursday's close, the Sierra Leone-focused company had a market value of $3.5-million, a fraction of the miner's value at its peak in 2011, when the shares touched highs of 400 pence.

London Mining, which owns the Marampa mine, is one of several small miners set up in West Africa during the commodities boom, on the back of rising demand for iron ore. They hoped to turn the region into a new producing frontier, to compete with Australia and Brazil.

But with larger, lower-cost producers like Rio Tinto and BHP Billiton pumping out cheaper ore - and prices languishing below $80/t - they have struggled.

Sources familiar with the matter had said earlier this week that JSW Steel was in talks with London Mining, showing Indian firms' growing appetite to secure raw materials abroad.

JSW, controlled by Indian billionaire Sajjan Jindal, has been eyeing up supply of raw materials and even steelmaking capacity outside India, securing mining assets in Chile, Mozambique and the United States.

London Mining's equity was virtually wiped out on Wednesday, when it warned that its shares now had "little or no value" as its lenders would no longer provide short-term funding.