Fox Resources says it is in talks with shareholder Jinchuan Group to extend a current offtake deal and a possible $20 million funding agreement for its Radio Hill nickel-copper project in the Pilbara.
Fox Resources says it is in talks with shareholder Jinchuan Group to extend a current offtake deal and a possible $20 million funding agreement for its Radio Hill nickel-copper project in the Pilbara.
The announcement is below:
Fox Resources Limited (ASX: FXR) today announced that it is in negotiations with strategic partner Jinchuan Group Limited (Jinchuan) regarding the development of the Company's heap leaching operation at Radio Hill in the Pilbara of Western Australia.
Following on from the announcement on Tuesday that Fox's two largest shareholders would be taking up their full entitlements of the current rights issue, Jinchuan has now resolved to negotiate potential extensions to the current offtake agreement with the Company as well as consider project financing.
"This is a significant development for Fox. We have a long association with Jinchuan and are pleased to report that they have provided us with an expression of intent to negotiate in good faith on alternative financing facilities for the project," said Mr Terry Streeter, Fox's Chairman.
Discussions are well underway covering two elements for Radio Hill's development:
1. Sales off-take - Jinchuan and Fox are discussing a potential nickel and copper carbonate Sales Offtake Agreement for Radio Hill. This will be delineated under the project feasibility study completed by Fox and provided to Jinchuan in late April 2010.
2. Construction - Jinchuan and Fox are also reviewing the capital cost of construction, which may lead to a Construction and Funding Agreement for A$20 million. This would be for engineering and construction services for the heap leaching processing operation and the associated infrastructure.
These ongoing discussions with Jinchuan demonstrate strong support for the technical viability of the Radio Hill heap leaching operation. Additionally, Jinchuan has expressed a desire to use reasonable endeavours to fast track the project to production.
The terms of the new offtake being presented to Jinchuan, while not finalised, would cover Fox's commissioning period and initial early years output from Radio Hill - providing a strong level of project support and confidence.
If the offtake agreement were to proceed, the secured initial sales for this critical period would enable Fox to continue to strengthen its management and technical capabilities as heap leaching development on other target projects (i.e. Sholl B2)
continue in parallel with the commissioning phase.
All potential agreements with Jinchuan will be based on arms length negotiated terms and conditions applicable for mineral products. Future agreements are subject to and conditional upon statutory approvals by the Provincial Government of Gansu Province and the Central Government of the People's Republic of China.
The Company is buoyed by the fact that Jinchuan remains a key strategic alliance for Fox and intends to finalise negotiations as soon as practicable.
