MAC/20: Mines and Communities

China update

Published by MAC on 2007-04-07

China update

7th April 2007

Jinchuan starts Zambian nickel mine construction

Gansu Jinchuan Nickel Group, China's largest nickel smelter, began construction of a nickel mine in the South African country of Zambia this week, according to a company official.

The Munali Nickel Mine is located 60 kilometers south of Zambia's capital city Lusaka and has been designed to output 8,500 tons of nickel concentrate per annum, upon planned completion in the middle of next year.

The project is managed by Albidon Ltd. and has a total investment of $65 million. Jinchuan and Albidon signed an off-take and financing agreement last December. According to the agreement, Jinchuan will invest $20 million to develop the Munali Mine and $5 million to purchase Albidon shares.

Jinchuan has agreed to purchase all the nickel concentrate from the project and any additional concentrate from expansion over the mine's operational lifetime.

The mine contains proven reserves of 100,000 tons of nickel, 1,400 tons of copper, 400 tons of cobalt and 15,000 tons of platinum and palladium.

Albidon was founded in 2000 and is an Africa-focused nickel exploration and development company.

Jinchuan is currently conducting a due diligence assessment on a nickel mine in the Philippine province of Palawan for possible joint exploration with MacroAsia Corportation. Jinchuan is also involved in the Australian Wingellina Nickel Limonite Deposit Project and has signed a framework agreement with the Australian mining company Metals X Ltd.

Joint venture negotiations between Jinchuan and another Philippine company Philnico Mining and Industrial Corp. broke down at the end of last year as Jinchuan was not comfortable with project financing and uncertain policies from the Philippine Government.

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