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.