Press Release - 20 March 2007Wingellina Attracts China’s Largest...

Press Release - 20 March 2007
Wingellina Attracts China’s Largest Nickel Producer
Metals X Limited (“Metals X”) is pleased to announce that it has entered into a framework
agreement with the largest nickel producer in China, Jinchuan Group Limited (“Jinchuan”) to
form a strategic alliance to assist Metals X in the development of its Australian mineral
assets, in particular the Wingellina Nickel Limonite deposit in Western Australia.
Pursuant to the framework agreement Jinchuan has entered into a subscription agreement
with Metals X under which Jinchuan will subscribe for 117 million shares in the Company at
a price of 28 cents each to raise a gross $32.76 million.
On completion Jinchuan, will become Metals X’s largest shareholder with an interest of
13.0% of its expanded share capital. In addition, at completion of the placement Mr Wang
Wei, currently Vice President of Jinchuan and in charge of engineering construction of
overseas projects in which Jinchuan participates will join the Metals X Board of Directors.
Mr Wang is a professor classed engineer specialising in non-ferrous metallurgy and he
brings substantial experience and knowledge of metallurgical nickel processing techniques,
in particular high pressure acid leach technology and operation.
Completion of the placement is subject to all statutory approvals to Jinchuan by the
Provincial Government of Gansu Province and the Chinese Central Government Authorities.
Under the Framework Agreement Jinchuan is willing to provide all technical assistance in its
power upon the request of Metals X to control and reduce engineering investment, improve
construction efficiency, assist in the purchase or manufacture of equipment and support the
construction and operation of the Central Musgrave Project assets using its own proprietary
technology and other technologies.
As part of the framework and subscription agreements, Metals X will grant off-take rights to
products generated by the processing of nickel oxide deposits within the area of the Central
Musgrave Project. In addition, Metals X has granted Jinchuan a first right of refusal to
purchase products from any other projects which Jinchuan participates in directly.
Metals X’s Managing Director, Peter Cook said “this is a major endorsement of the potential
of the Central Musgrave Project which includes the Wingellina Nickel Limonite deposit. It is
a significant step forward for both the Company and the State of Western Australia. The
Jinchuan Group is a world leader in both the nickel industry and the construction of, and
operation of High Pressure Acid Leach plants.”
Wingellina today is estimated to be the 16th largest undeveloped Nickel Oxide deposit in the
world and preliminary scoping study works suggest that it may progress into a mining
operation producing approximately 40,000 tonnes of Nickel in metal hydroxide complexes
also containing approximately 2000 tonnes of recoverable Cobalt metal as a co-product.
PRESS RELEASE
WINGELLINA ATTRACTS CHINA’S LARGEST NICKEL PRODUCER 20 March 2007
Page 2
The current Identified Mineral Resource estimate at Wingellina based upon a 0.5% cut-off
grade is 213.2 million tonnes of ore grading 0.95% Ni, 0.074% Cobalt and 45.2% Fe2O3.
The deposit contains 2.03 million tonnes of nickel metal and an ultimate project life of more
than 40 years is conceivable.
Metal X’s Central Musgrave Project is centred upon the Giles Complex ultramafic rocks of
the Wingellina layered intrusive complex. Metals X is continuing its search for additional
Nickel Limonite and Nickel Sulphide mineralisation within the geological complex.
Jinchuan is China’s largest nickel producer and the largest copper producer in Northern
China. In 2006, Jinchuan produced 102,000 tonnes of nickel metal, 200,000 tonnes of
copper metal, 6,300 tonnes of cobalt metal and over 1 million tonnes of chemical byproducts.
It has completed rapid expansion in capacity over the past year and forecasts to
produce 110,000 tonnes of Nickel metal, 250,000 tonnes of copper metal, 6,000 tonnes of
Cobalt metal and 1.3 million tonnes of chemical by-products in 2007 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 (approx. A$6.1 billion)
and generated an after tax net profit of 4 billion RMB (approx. A$0.7 billion).
Metals X has agreed to make formal binding agreements for each of the Parts of the
Framework Agreement through friendly consultation and in the spirit of equality, mutual
benefit and trust.
Metals X’s Managing Director, Peter Cook said
“The future of Metals X looks bright. Our strategic positioning in both the nickel and tin
industries has placed us into the two hottest metals in the base metal market. Through
Jinchuan, we will have a strategic partner who has both the financial capacity and technical
capability to assist us with the process of turning Wingellina into one of the Country’s largest
and long life nickel producers.”
Metals X also has a strong nickel royalty portfolio which earns annual royalty income as a
percentage of totals sales from the Mt Keith mine and Kambalda (East Location 48 only)
mines. In the last quarter receipts from these royalties totalled $2.85 million and these
royalties are without exposure to capital and operating risk and provide uncapped exposure
to higher nickel prices.
In parallel with its Nickel business, Metals X continues to advance its tin assets. Metals X is
currently Australia’s largest tin producer from our newly developed Collingwood Tin Project,
albeit at a modest 3500-4000 tonnes per annum. In response to stronger tin prices, Metals
X has plans to recommence its Renison Project in the current year.
The Rentails tailings re-treatment and tin fumer project has achieved its technical objectives
and we are planning to commence pilot testing as a final step before completion of a
bankable feasibility study. Collectively, these projects can elevate the Company to be a top
10 global producer of tin.