Ann: Steel Plant JV Tangible Steps Forward-NSL.AX, page-3

NSL Consolidated Limited (Company, ASX: NSL, NSLO), is pleased to announce further significant progress on the Binding Joint Venture Agreement (JVA) for the establishment of a greenfield steel making plant in Andhra Pradesh (AP). As previously announced on June 27, 2016 the Company signed a JVA with the Wei Hua Group Co Ltd (WHG), China’s leading heavy equipment crane building company, for the establishment of a steel making plant in AP. Recently, Company representatives have been in both India and China to progress the JV, whereby it was decided that the initial priority will be the completion of a pre-feasibility of the front end of the steel plant, being a pellet plant. It is expected this will be completed by 31 December 2016, with the steel plant prefeasibility to follow shortly thereafter. A large, high level Chinese delegation has committed to visit India in October of this year. In addition to Wei Hua, the delegation includes:  China Communications Construction Company (CCCC), a world’s top 500 Company: o CCCC and its subsidiaries are principally engaged in the design and construction of transportation infrastructure, dredging and heavy machinery manufacturing and have in excess of 100,000 employees. Refer to http://en.ccccltd.cn/ for further information;  Dalian Huarui Heavy Industry Group Co. Ltd (DHHI): o DHHI is a subsidiary company of DHI/DCW Group Co. Ltd, and is the largest and leading enterprise in the heavy machinery industry in China. It has about 10,000 employees and total assets of over 20 billion RMB. DHHI is mainly dedicated to supplying equipment and services with high and new technical content to the fields of metallurgy, ports, energy, mining, engineering, transportation, aviation, aerospace and shipbuilding. Refer to http://www.dhidcw.com/dhidcw/index.htm for further information; and  China Metallurgical Group Corporation (MCC): o MCC provides metallurgical construction and steel operation services both in the People's Republic of China and internationally, and engages in providing metallurgical engineering, high-end housing construction, mine construction and development, middle and high end real estate development, municipal traffic infrastructure, technical equipment and steel structures, environmental engineering and new energy projects. China Metallurgical Group Corporation operates as a subsidiary of China Minmetals Corporation and had 2015 revenues in excess of 220 Billion RMB. The purpose of the delegation is to: a. build on the knowledge and bona fides the Company possesses in AP; b. complete aspects of the pellet and steel plant prefeasibility; c. meet with relevant pellet and steel plant stakeholders; and d. support NSL’s AP business strategy in line with the Memorandum of Understanding (MoU) announced previously directly with the Government of Andhra Pradesh (GoAP). The delegation will visit the proposed pellet and steel plant locations, NSL’s existing operations, and other critical AP infrastructure, while holding meetings with the high level political and bureaucratic officials within the GoAP. The meetings with GoAP will focus on NSL’s business strategy and opportunities, leveraging on NSL’s bona fides by cooperating with NSL on other infrastructure opportunities for the advancement and development of AP. Managing Director, Mr Goode commented: “We are very excited by the continued strengthening of the relationship with Wei Hua and the further progression of the binding agreement towards the proposed steel plant. The commitment of the Chinese delegation provides further independent validation of the strong relationships and ties that NSL has built within India, and in particular the GoAP. The Company now has a successful track record of operating in India. With its own mines and beneficiation plant, production and iron ore sales, established offtake agreements with JSW Steel and BMM Ispat, and strong continuing government support, the Company’s significant momentum continues to accelerate”. Further to the traction being achieved in China, the Company continues to receive excellent support from the GoAP, culminating in the receipt of a letter providing assurances from the GoAP to extend all support and cooperation required for the development of the project, and specifically to provide required land and other approvals through a single desk portal within 21 days of receipt of application(s). The letter, received from the Chief Secretary of GoAP, being the highest level bureaucrat in the State, is again further testament to the bona fides and regard the Company is held with GoAP. As announced previously, the Company had signed an MOU directly with GoAP, whereby GoAP will facilitate the necessary assistance for the Company to grow its Andhra Pradesh mining, beneficiation and value addition activities to in excess of 8 million tonnes per annum of iron ore; such assistance includes prompt land acquisition, adequate infrastructure development and attractive incentives as per the policies / rules and regulations of the State Government. In addition, the GoAP will support the Company’s participation in significant projects in Andhra Pradesh, wherever feasible. Such participation may include providing advisory services, setting up manufacturing facilities, infrastructure development, R&D, and implementation support. Through this relationship, the Company is aiming to support the development of infrastructure in Andhra Pradesh, leveraging the Government’s focus on promoting manufacturing and industrialization in the state and facilitating a conducive investment environment. One key enabler to the execution of the MoU was the GoAP committing to the development of the Orvakallu Mega Industrial Hub, located in the Kurnool District some 30 km from NSL’s existing operations. This 28,000 acre hub will include access to water, power, rail and road and is also proposed for one of AP’s four greenfield airports outlined in the strategic infrastructure plan for the State. The Company will be proposing utilising this industrial hub as a foundation for the binding agreement with Wei Hua, and continues to leverage the GoAP MOU, with discussions on providing the approvals for the land, power, water and other utilities for the steel project JV already commenced. Wei Hua Group Co Ltd Wei Hua Group Co Ltd, with revenues in excess of US$1 billion in 2015, has already acquired key components of the proposed steel making plant and these are warehoused in China and ready for deployment, with the remainder to be purchased as required, based on Indian progress. Wei Hua is looking to diversify its revenue stream, both in location and source generation (Reference http://www.weihuagrp.com/). Blast furnace shell in Chinese warehouse The Wei Hua Group also brings strong ties with the Asia Infrastructure Investment Bank (AIIB). The AIIB is a newly established international financial institution that aims to support the building of infrastructure in the Asia-Pacific region. The bank has 37 member states and was proposed as an initiative by the government of China. The capital of the bank is $100 billion, equivalent to 2⁄3 of the capital of the Asian Development Bank and about half that of the World Bank. Wei Hua views the Indian economy as one of the most attractive up and coming investment opportunities in the world. India is expected to become the world's second largest producer of crude steel in the next 10 years, moving up from the third position, as its capacity is projected to increase to about 300 MT by 2025 from 81 MT in 2013-14. Huge scope for growth is offered by India’s comparatively low per capita steel consumption and the expected rise in consumption due to increased infrastructure construction and the thriving automobile and railways sectors. In addition to this, Wei Hua also sees significant value in what NSL has been able to achieve in India, as the only foreign company to own and operate iron ore mines and also with the significant progress made by the Company with the GoAP as part of the existing joint MoU. Key Terms of Agreement As previously announced, the Joint Venture Company will be established with a 50/50 shareholding and importantly, NSL is not required to fund any aspect of the Joint Venture. NSL shall provide reasonable assistance to Wei Hua for the feasibility studies, including the latest market research on the Iron and Steel industry in India which will assist in determining the size and scale of the proposed steel plant project. NSL shall conduct a study to understand the governmental approvals, licences, consents, no-objections etc. required from statutory, governmental and other authorities under the laws of India for the Proposed Project, setting up of the JV, and commencement of the preliminary activities for the project. This will be undertaken, in consultation with Wei Hua and NSL shall seek reasonable assistance from Wei Hua. NSL shall commence the preliminary activities for obtaining and providing the legal and regulatory approvals, accessing available land for the Proposed Project and shall take all appropriate steps towards the supply of supplementary materials and human resources for the Proposed Project. NSL shall be responsible for the operations, commercial marketing and sale of the steel products from the Proposed Project, on an exclusive basis. Wei Hua shall carry out its feasibility for the steel market in India from a technical, financial and legal perspective, with reasonable assistance from NSL where sought by Wei Hua. Which will assist in determining the size and scale of the Proposed Project. Wei Hua shall provide the equipment for the Proposed Project. The equipment shall be delivered free of charge and as per a mutually-acceptable delivery schedule, prepared by both parties. The Parties shall jointly discuss and finalise JV Shareholder and Operating Agreements in a timely manner, post completion of feasibility studies. Parties shall collectively approach and apply for financing from Asian Infrastructure Investment Bank for the Proposed Project. Parties shall collectively ensure that the Proposed Project results in the welfare of the local community and economic and social development in the area of the Proposed Project. The Binding Agreement is valid for a period of 12 months from the Commencement Date, or as extended by the Parties in writing; or Either Party may terminate this Agreement by giving a notice of 30 days.