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Jinchuan Group signs Australian nickel mine deal with Metals X

Published by MAC on 2007-03-23

Jinchuan Group signs Australian nickel mine deal with Metals X

Gansu Jinchuan Group Ltd., China's largest nickel producer, has signed a framework agreement to assist Australian mining company Metals X Ltd. in the development of its Wingellina Nickel Limonite deposit project in Western Australia, Metals X announced on March 20.

The Wingellina deposit is estimated to be the 16th largest nickel oxide deposit in the world, with preliminary surveys suggesting an annual production capacity of approximately 40,000 tons of nickel and 2000 tons of recoverable cobalt as co-product.

Current surveys suggest that the mine holds deposits of 213.2 million tons of ore grading 0.95 percent nickel, 0.074 percent cobalt and 45.2 percent iron oxide. The deposit contains 2.03 million tons of nickel metal and the project has an estimated service period of over 40 years. Jinchuan has entered into a subscription agreement to purchase 117 million Metals X shares at AUD $0.28 per share, which will raise a total of AUD $32.76 million.

This will make Jinchuan the largest single shareholder in Metals X with 13 percent of the expanded share capital. As part of the deal, Jinchuan's vice-president will join Metals X's board of directors.

Under the framework agreement, Jinchuan will provide technical assistance to Metals X for the construction and operation of the Central Musgrave project. In return, Jinchuan will be granted nickel oxide off-take rights and first right of refusal to purchase products from any other projects it is directly involved in.

The agreement is subject to approval by the provincial government of Gansu Province and Chinese central government authorities.

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