dj interview

=DJ INTERVIEW: Australia's Fox Resources Seeks China Investor



SYDNEY (Dow Jones)--Australian base metal producer Fox Resources Ltd. (FXR.AU) said

Thursday it plans to start talks with Jinchuan Group Ltd. and Sinosteel Corp. over the

possibility of the Chinese companies taking an equity stake in the company for

exploration and development funding.

Both Jinchuan, China's largest nickel producer, and Sinosteel already have offtake

agreements for nickel, copper and zinc concentrate.

"We want to start discussions for the opportunity to participate in equity in the

new financial year. There won't be a limit on the stake," said Managing

Director Don Harper. The new financial year starts on July 1.

Chinese companies have changed tack recently, moving from forging long-term offtake

agreements for key raw materials such as iron ore and copper concentrate that feed

China's economic boom, to taking equity stakes in early-stage projects.

"Chinese companies now want to help fund exploration and development. They realize

they now have to get in very early in the process of new project development to secure

supplies. They prefer producing projects but these are getting harder to find,"

Harper said.

China's largest aluminum producer, Aluminum Corp. of China Ltd., or Chalco, has

agreed to develop the A$3 billion Aurukun bauxite deposit in Northern Queensland. On a

lesser scale, China's largest tin producer Yunnan Tin Co. Ltd. took a 5% stake in

Metallica Minerals Ltd., a company with a development project portfolio including nickel,

coal and bauxite.

Fox Resources operates the underground nickel and copper Radio Hill mine in northwest

Australia, and is fasttracking the restart of the West Wundho copper-zinc mine.

Radio Hill has a mine life of 2.5 years but Fox has a busy program for its exploration

and mining tenements in the region, and plans to spend A$10 million this year on

exploration.

"We'll first focus on the development of our mature leases," Harper

said.

In March 2004, Fox signed a three year off-take agreement with Jinchuan to sell all

copper and nickel concentrate processed from Radio Hill.

Fox is producing around 35,000 metric tons of nickel and copper concentrates per year,

shipped monthly to Jinchuan.

In May, Fox signed an offtake agreement with Sinosteel for an initial 12,000 tons of

zinc concentrate from West Whundo, a project close to Radio Hill.

Fox also has an access agreement for nearby tenements with De Beers for nickel, copper,

gold, zinc, iron ore and uranium exploration, but excluding diamonds.

Fox Resources shares closed Thursday down 1.7% at 88 cents.