Fox Resources negotiates with Jinchuan Group on Radio Hill project
Fox Resources (ASX: FXR) is in negotiations with strategic partner
Jinchuan Group Limited regarding the development of the company’s heap
leaching operation at Radio Hill in the Pilbara of Western Australia.
Fox’s
two largest shareholders announced on Tuesday 18 May that they would be
taking up their full entitlements of the current rights issue.
As
a result, Jinchuan has now resolved to negotiate potential extensions
to the current offtake agreement with the company as well as consider
project financing.
Terry Streeter, Fox’s Chairman, said “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.”
The company said it is buoyed by
the fact that Jinchuan remains a key strategic alliance for Fox and
intends to finalise negotiations as soon as practicable.
Discussions
are well underway covering two elements for Radio Hill’s development.
Firstly,
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.
Secondly, 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.
Fox said 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 company said 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.
Fox
added that if the offtake agreement were to proceed, the secured
initial sales for this critical period would enable the company 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.
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