NAIROBI, July 29 (Reuters) - Tiomin Resources Inc. (TIO.TO: Quote, Profile, Research) said on Tuesday it had signed a deal with China's Jinchuan Group Ltd. to invest $25 million in a Kenyan titanium project.

The Canadian firm hopes to mine an average of 330,000 tonnes of titanium-bearing ilmenite, 77,000 tonnes of rutile and 37,000 tonnes of zircon a year from the Kwale Mineral Sands site.

Tiomin said the investment would give Jinchuan a 70 percent stake in the project and would optimise shareholder returns.

"This transaction is extremely important for Tiomin and removes the cloud of uncertainty that has driven the shares to cash value," Robert Jackson, Tiomin's president and chief executive officer, said in a statement. The project has been plagued by delays including a land dispute with farmers and drawn out talks with the government.

Jackson said Jinchuan was a strong partner and that Tiomin was confident the project would be underway as soon as possible.

Capital costs of the project at the coastal site are estimated at $176 million, Toronto-based Tiomin says.

Last April, Jinchuan raised a smaller shareholding in the Kwale project to 20 percent at a cost of for $9.52 million.

Increasing demand for titanium from China's aerospace and aviation sectors has encouraged Chinese producers to expand their titanium processing capacities. Jinchuan is China's biggest nickel producer and fourth-largest copper producer. (Reporting by Daniel Wallis, Editing by Peter Blackburn) (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/)