11 August 2008
SALES OFFTAKE CONTRACT AND PROCESSING PLANT FIRST RIGHT OF PURCHASE AGREEMENT SIGNED
Diversified resources company IMX Resources NL (ASX:IXR) has signed two major agreements with Chinese partner Jilin Tonghua Iron and Steel Mining Co Ltd (?Tonghua Mining?), regarding the sale of run of mine iron / copper ore from its Cairn Hill project in South Australia, and the conditions of the first right of purchase of the processing plant in China.
IMX Resources Managing Director Duncan McBain said the contracts formalise the arrangements put in place in the Heads of Agreement signed last December.
?The agreements mark the further evolution of the project. The milestones are steadily being ticked off, with mining and railing expected to commence in Q4 2008 ahead of the first shipment in Q1 2009,? Mr McBain said.
The specific agreements with Tonghua Mining include the Long Term Purchase and Sales Contract For Iron & Copper Ore (?Sales Offtake Contract?) and the Asset Disposal Process Agreement For Yingkou Australian Ore Processing Company Ltd (?Process Plant Disposal Agreement?).
The Sales Offtake Contract covers the sale of the unprocessed ROM ore from Phase 1 of the Cairn Hill Magnetite ? Copper ? Gold project located 55 km south-east of Coober Pedy.
Under the Sales Offtake Contract the total planned annual ROM production for the magnetite / copper ore from Phase 1 at Cairn Hill will be sold to Tonghua Mining. Up to 1.4 million tonnes per year will be sold to Tonhgua Mining over a three year period (subject to extensions) at market related prices. The ore will be sold on a FOB basis with the target shipping specification averaging 55% Fe and 0.43% Cu. IMX Resources receives payment for both the contained iron and copper, with the prices based on internationally traded benchmark prices and a 20% discount to allow for processing costs and losses.
The Process Plant Disposal Agreement covers the process to be followed should the contract not be renewed by mutual agreement beyond the initial three year term. Under this agreement, IMX Resources has the first right to purchase the processing plant at Bayuquan in Liaoning Province, NE China at an independently assessed market price.
Recently IMX Resources was very pleased to be able to host Mr An Feng Cheng, Chairman of the Tonghua Iron & Steel Group on a visit to Australia and have the opportunity to take him to site at Cairn Hill to show him the trial mining operations and the port facilities in Darwin. IMX Resources believes that this first visit by Mr An to Australia has assisted in deepen the understanding between the two companies.
DUNCAN MCBAIN
MANAGING DIRECTOR
About Tonghua Mining
Tonghua Mining is 62.3% owned by Tonghua Iron & Steel (Group) Co Ltd (Tonghua) and 37.7% by Beijing Huaxi Jianlong Mining & Science Pty Ltd (Jianlong Mining).
Jianlong Steel Holdings (Jianlong) owns 36.09% of Tonghua (with the balance owned by the Jilin Provincial Government) and is also the parent company of Beijing Huaxi Jianlong Mining & Science Pty Ltd.
Tonghua Mining specialises in exploration, development of resources and operation of captive mines. In addition, Tonghua Mining sells mining equipment and provides technical consultancy. In 2007 the shareholders capitalised Tonghua Mining with a CNY1 billion (A$156 million) injection of funds to allow it to expand and acquire projects in China and overseas.
About Tonghua Iron & Steel
Tonghua Iron & Steel is headquartered in Changchun, capital of Jilin Province, China. Tonghua is the largest steel producer in Jilin Province, with an output of 7 million tonnes per year of long and flat products. Plans are being implemented to expand the capacity to over 10 million tonnes by 2009.
About Jianlong Steel Holdings
Jianlong Steel Holdings (?Jianlong?) owns 36.09% of Tonghua, as well as being the parent company of Jianlong Mining. In 2006, Jianlong ranked as the 17th largest steelmaker in China and 49th in the world, with steel production estimated at 14.3 million tonnes per year in 2008. Jianlong is also the second largest privately owned steelmaker in China. In addition to the investment in Tonghua, Jianlong has investments in steel mills in Tangshan and Chengde in Hebei Province, Fushun in Liaoning Province, Shuangyashan in Heilongjiang Province, Panshi in Jilin Province and Ningbo in Zhejiang Province.
Jianlong it is the largest manufacturer of medium and broad width hot strip coil in China. Jianlong?s interests also extend into mining, shipbuilding, coke and coal chemicals.
Jianlong is 26.7% owned by the Hong Kong listed, Shanghai based conglomerate Fosun International which is capitalized at HK$35b.
About Beijing Huaxi Jianlong Mining & Science
Jianlong Mining specialises in the exploration and development of iron ore and non-ferrous metal deposits and, of particular relevance to the Cairn Hill project, has significant technical expertise in both flotation and magnetic separation with a focus on efficiency and modern management practices. Jianlong Mining owns and manages 31 mines throughout China producing iron ore, coal, calcite, molybdenum and copper.
About IMX Resources NL
IMX Resources NL (ASX:IXR) ? is headquartered in Perth, Western Australia, is listed on the Australian Stock Exchange (ASX) with a current market capitalisation of approximately $75m.
IMX Resources is an active diversified mining company with projects in South Australia, Tasmania and Tanzania, East Africa, focusing on a range of commodities including iron-ore, nickel, gold, copper, platinum and uranium.
The company is disciplined in following a careful strategy to maximise shareholder value by discovering and developing ore bodies. IMX Resources achieves this by participating in multiple, quality exploration projects in joint ventures with global mining companies, and by listing spin-off companies, to ensure programs with high potential are well-funded, while retaining a significant interest to provide exposure for IMX Resources shareholders. In 2008 it is anticipated that IMX Resources shareholders will have leverage to approximately $17m of exploration, with IMX Resources contributing around $1.5m.
IMX Resources 100%-owned project is Cairn Hill, 55 kilometres south-east of Coober Pedy, South Australia. This unique magnetite Fe ? Cu ? Au project is close to the Darwin to Adelaide railway line. Phase 1, which is currently under development, is a DSO magnetite project, studies indicate this project has excellent rates of return. Testwork indicates that the ore produces a premium coarse grained magnetite product, with a clean saleable Cu / Au concentrate. IMX Resources has a three year sales offtake agreement with Jilin Tonghua Iron & Steel (Group) Mining Co Ltd for the DSO magnetite production. Beyond Phase 1, testwork has commenced on Phase 2 of the project targeted at producing a premium grade magnetite concentrate. Phase 3 is focussed on the 90% of the 40km of magnetic anomalies remain largely undrilled. The upside for Cairn Hill remains the definition of further resources to support a long term 3-5mtpa operation.
In Tanzania, Lonmin Plc is earning interest in IMX Resources Mibango platinum joint ventures. Lonmin currently funds and operates the exploration at Mibango.
IMX Resources spun off 70% of the Nachingwea Nickel - Copper project in Tanzania into a Continental Nickel Limited (TSXV:CNI) in August 2007. IMX Resources currently holds 47.3% of Continental Nickel and retains a 30% free carried interest in the Nachingwea Nickel - Copper project through a joint venture company structure.
IMX Resources owns 39.5% of Uranex (ASX:UNX), a spin-off company from IMX Resources, which listed on the ASX in October 2005 and is dedicated uranium company with assets in Australia and Tanzania.
Visit: www.imxresources.com.au
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