* Companies failed to reach agreement over price
* Initially valued at $500-600 mln, but the value has fallen
* B&A worried about risks of working in Guinea -source
By Silvia Antonioli and Anjuli Davies
LONDON, Feb 25 (Reuters) - Brazilian mining firm B&A Mineração has pulled out of talks to buy BHP Billiton's stake in the Mount Nimba iron ore deposit in Guinea, bank and industry sources said, in the latest sign that projects in riskier countries have become a tough sell.
B&A Mineração lost interest after lengthy negotiations, because it found the project too costly, risky and difficult from an operational and political perspective, the sources said.
Shareholders have been pushing mining companies such as BHP Billiton to focus on cutting costs and delivering returns from existing assets rather spend money on developing large, greenfield projects.
But attempts to sell assets in risky countries are proving increasingly difficult in an environment of weaker metals prices and reduced risk appetite in the mining business.
Questions over Guinea's political stability and whether the government will allow firms to export through neighbouring Liberia, which is vital to making mines profitable at current prices, have complicated investment decisions on its big iron ore projects, including Mount Nimba and the giant Simandou deposit.
One source said he would be surprised to see another company make an offer for the project after B&A pulled out of talks.
Market sources had initially valued the potential deal at around $500-$600 million but more recently said its value had fallen sharply given the gloomier outlook for iron ore prices and the increasing caution in the mining industry.
BHP decided to pull out of Mount Nimba in 2012 as part of a withdrawal from iron ore and other projects across West Africa.
BHP, the world's largest miner, owns just over 40 percent in the venture to develop the Mount Nimba deposit, and gold miner Newmont owns another 40 percent.
B&A officials could not be reached for comment. BHP declined to comment.
In December 2012 BHP selected B&A Mineração among a small group of suitors, which included top world steelmaker ArcelorMittal, as the preferred bidder for its stake in Mount Nimba.
In October BHP said it was still in talks to sell its stake to B&A.
The two sides neared an agreement late last year but then drifted apart on price and some other conditions, the sources said.
"At the end of the day, I think B&A was afraid of the risk involved with operating in Guinea," a second source said.
B&A was founded in 2012 by Roger Agnelli, the former chief executive of Brazilian mining giant Vale, together with investment bank BTG Pactual, which is controlled by Brazilian billionaire financier André Esteves.
Agnelli said last year the group had ambitious plans to invest in fertiliser, iron ore and copper, mainly in Latin America and Africa.
So far it has bought two assets: the Rio Verde Mineracao fertiliser group in the Brazilian state of Para and the Cuprum Resources copper project in Chile.