news article on fox

Ferret's Stock to Watch: FOX RESOURCES LIMITED
09:21, Tuesday, 23 January 2007

NICKEL HAS BEEN THE MAGIC METAL FOR SMALL PRODUCERS

Sydney - Tuesday - January 23: (RWE Aust Business News)
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OVERVIEW
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Fox Resources Ltd (ASX:FXR) decided to go for nickel when it
acquired the Radio Hill nickel sulphide plant and underground mine which
is situated 35 kilometres south of Karratha in the west Pilbara region of
Western Australia.
The price of nickel at that time was $US6,000 tonne compared
with $US36,000 tonne last Friday on the London Metal Exchange.
A sixth sense seemed to lead the company to leave copper and
cobalt and concentrate on nickel.
Yesterday the company announced it had completed a bankable
feasibility study on its wholly-owned Radio Hill nickel-copper-cobalt
project.
The positive results support Fox's renewed focus on developing
its nickel assets at a time of record nickel prices and follows positive
updates from the company's Sholl B2 nickel project, reported on
January 12.
These include:
* Development of a 360,000 tpa underground mine based on a zone
of lower-grade nickel and copper ore located in the hanging wall or
above the existing mined Radio Hill massive sulphides is technically and
commercially feasible;
* Mining reserve contains 6,000 tonnes of nickel, 8,200 tonnes of
copper and 350 tonnes of cobalt;
* Initial 2.5-year mine life at Radio Hill, producing up to
58,350 dmt of nickel concentrate containing 4,084t nickel metal and
23,830 dmt of copper concentrate containing 5,481t copper metal;
* With the additional mining reserve at Radio Hill, Fox is
targeting a two-year mining reserve at its 100 per cent-owned Sholl B2
project, which would deliver an overall 4.5-year nickel mine life;
* Highly competitive cost structure due to the efficient and
low-cost mining methods and excellent infrastructure.
* Product offtake agreement already in place with Jinchuan Group
Ltd, China's largest nickel producer.
* Based on an average $A29,500 nickel price, the study indicated
an NPV of over $A20 million.

SHARE PRICE MOVEMENTS
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Shares of Fox Resources fell 2.5c to $1.63 yesterday. Rolling
high for the year is $1.97, also an all-time high, while the low is 28c.
The company has 117.2 million with a market cap of $191.7 million.
Starting the year with a bang, Fox Resources announced a joint
venture agreement with recently listed Prime Minerals Ltd (ASX:PIM) for
its non-core exploration project, Star of Mangaroon Gold.
Under the agreement, Fox will maintain an exposure to gold
through the Star of Mangaroon gold project, where Prime is earning up to
80 per cent interest in the project and Fox will maintain a 20 per cent
interest.
Prime will be required to spend $500,000 within the next five
years to earn 80 per cent.
The Star or Mangaroon Gold project is located approximately
170km north of Gascoyne Junction and 250km northeast of Carnarvon in
Western Australia.
"While we remain focused on unlocking the value of Fox's core
base metal assets and operations located in the Pilbara, we are also
conscious of our exposure to quality gold assets," said managing
director Don Harper.
"We are pleased to have finalised this deal with Prime which
will ensure that exploration is accelerated at the Star of Mangaroon
Gold project with a view to driving shareholder value for both
companies."

BACKGROUND
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Fox Resources Ltd was listed on the Australian Stock Exchange on
April 26, 2002.
In September 2002 Fox acquired the Radio Hill nickel sulphide
plant and underground mine.
The purchase consisted of the Radio Hill nickel treatment plant
with a throughput capacity of 200,000 tonnes per annum, a fully
operational 1.8 kilometre long underground decline to a depth of 270
metres, four nickel sulphide deposits and operational base facilities
all within ten mining leases.
Previous owners from 1988 to 2002 had spent over $60 million in
capital.
Approximately 20,000 tonnes of nickel and 16,000 tonnes of
copper metal were produced over that period from Radio Hill.
Milling involves conventional crushing, grinding and froth
flotation.
Underground mining involves level development, longhole stope
production and some handheld mining.
Four months of underground drilling in late 2003 established a
two-year JORC resource of 438,000 tonnes at 1.98 per cent nickel and 1.49
per cent copper, which includes a reserve of 313,000 tonnes at 1.83 per
cent nickel and 1.17 per cent copper.
In January 2004 Fox appointed Roche Mining Process Engineering to
commence refurbishment of the Radio Hill nickel sulphide plant to be
commissioned by mid 2004.
In March 2004 Fox signed a three-year off-take agreement with
Jinchuan to sell all copper concentrate processed from Radio Hill.
Both Fox and Jinchuan see this agreement as the beginning of a
long-term relationship to develop the nickel resources at Radio Hill and
the Radio Hill province.
Jinchuan has an annual production capacity of 130,000 tonnes of
nickel, 200,000 tonnes of copper and 6,000 tonnes of cobalt.
Its nickel production accounts for more than 88 per cent of the
total in China.
Jinchuan is named the nickel city of China and is currently
the fourth largest nickel producer in the world.
In March 2005 the underground mining operation at Radio Hill
successfully completed the change over to owner miner.
Production improved significantly in March compared with
February where production was affected by the mining contractor
experiencing poor equipment availability and a shortage of experienced
skilled miners which is an industry-wide phenomenon.
Since Fox purchased the Radio Hill mine nickel prices have
increased significantly from $US6,000 to $US14,000 per tonne as at July
2005.
This increase in price greatly enhanced the viability of the
Radio Hill mine and potential of other nickel deposits within Fox's
extensive square kilometre land holding.
Fox has begun an aggressive exploration program targeting nickel
sulphide systems within 15 kilometres of the Radio Hill plant.
Underground and surface drilling in conjunction with geophysical
testing is being used to delineate nickel resources.
ENDS