fox secures new nickel offtake agreement for sholl b2
fox secures new nickel offtake agreement for sholl b2
ABN 44 079 902 499 14 January 2008 ASX / Media Announcement FOX SECURES NEW NICKEL OFFTAKE AGREEMENT FOR SHOLL B2 Pilbara nickel explorer and producer, Fox Resources Limited (ASX: FXR) today announced it has executed an agreement with China’s largest nickel producer, Jinchuan Group Limited (Jinchuan), for all nickel and copper concentrates produced from the Company’s Sholl B2 Nickel Project. Sholl B2 is located 5km north of the Radio Hill mill (Figure 1) which is located 35km southeast of Karratha in the Pilbara region of Western Australia. Commenting on the new offtake agreement, Fox Resources’ Managing Director, Mr Don Harper, said the offtake agreement together with Jinchuan’s recent subscription for shares in the Company is a tremendous vote of confidence and demonstrates the strong relationship between the firms. “The support from Jinchuan enables us to start the project and avoid the required hedging that comes with bank debt,” said Mr Harper. “The terms of the offtake agreement, including payable terms and pricing, are excellent in the current market,” he said. “The icing on the cake is that we have the advantage of leveraging off our current transport logistics, storage infrastructure at the Port of Dampier and existing shipping arrangements to Jinchuan.” Fox successfully completed the feasibility study at Sholl B2 to examine mining nickel and copper ore using the low cost open pit mining method. The study recommended that ore be treated at the existing Radio Hill mill using conventional technology via the proposed flowsheet that comprised 2-staged crushing, 2 x ball milling, flotation and thickening, to produce a bulk nickel and copper concentrate that will be exported through the port of Dampier only 40km from Radio Hill and treated at Jinchuan’s smelter/refinery complex in China. The first stage of the project will deliver 2,211t of nickel and 2,653t of copper in ten months from an open pit mine reserve of 425,000t @ 0.74% nickel, 0.87% copper. The second stage of nickel and copper production will involve a decline accessed from the base of the proposed open pit. A Feasibility Study is currently underway evaluating the mining of massive nickel sulphides along the strike of the orebody (Figure 2). The Sholl B2 complex contains an estimated 32,000t of nickel and 37,000t of copper metal (Table 1). The Stage 1 open pit ore production is scheduled to begin in the second half of 2008. Fox also has a life-of-mine offtake agreement with Jinchuan for all nickel and copper concentrate sales from the Radio Hill operations. Radio Hill -ENDSFor further details please contact: Don Harper, Managing Director +61 8 9318 5600 Ann Nahajski, Investor Relations +61 8 9386 1233 1 Tully Road, East Perth WA 6007 Tel: 61 8 9318 5600 Fax: 61 8 9318 5666 Web: www.foxresources.com.au Email: [email protected] APPENDIX Table 1 - Mineral Resource Nickel-Copper Mineral Resource inclusive of Ore Reserve (2007 Annual Report) Resource Area Sholl B2 Sholl B2 Radio Hill Radio Hill Ruth Well Ruth Well Radio Hill Total Contained Metal (Tonnes) Ore Type Resource Classification Primary Sulphide Primary Sulphide Primary Sulphide Primary Sulphide Primary Sulphide Primary Sulphide Sulphide Scats Indicated Inferred Indicated Inferred Indicated Inferred Indicated Tonnes Ni% Cu% Co% Pd g/t 633,000 5,324,000 1,181,000 94,000 60,000 9,000 96,000 7,397,000 0.59 0.53 0.79 0.70 0.99 1.05 0.66 0.58 0.64 0.62 1.09 0.90 0.87 0.87 1.04 0.71 N/A N/A 0.04 0.03 0.04 0.04 0.04 0.04 N/A N/A 0.5 0.4 N/A N/A N/A 0.5 43,263 52,418 566 Figure 1 – Sholl B2 Project 5km north east of Radio Hill Processing Plant Figure 2 – Sholl B2 Stage 1 open pit About Jinchuan Group Limited Jinchuan is China’s largest nickel producer; production in 2006 was approximately 102,000t of nickel metal, 200,000t of copper metal, 6,300t of cobalt metal and over 1million tonnes of chemical by-products. It has undergone rapid expansion in capacity over the past year it is forecast to produce 110,000t of nickel metal, 250,000t of copper metal, 6,000t of cobalt and 1.3 million tonnes chemical by-products in 2007. Jinchuan has a strategic expansion in train to increase its nickel and cobalt production by an additional 35% and further expand its copper and chemical by-product output by an additional 60% by 2010. In 2006, Jinchuan generated operating revenue of 35.2 billion RMB (approximately A$6.1billion) and generated an after tax net profit of 4 billion RMB (A$0.7 billion). The information in this report that relates to exploration results, mineral resources or ore reserves is based on information compiled by Mr Gustav Wolff who is a consultant to the company and is a member of the Australasian Institute of Mining and Metallurgy. Mr Wolff has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Wolff consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.