Zinifex makes friends with Jinchuan and completes its Allegiance purchase

Jinchuan Group has accepted Zinifex Australia’s offer for its 10.4% interest in Allegiance Mining. With Jinchuan’s acceptance, Zinifex will own more than 90% of Allegiance and will move to compulsorily acquire the outstanding shares and de-list the company.Zinifex’s CEO, Andrew Michelmore, said that Zinifex was very pleased to have gained Jinchuan’s support. “We view Jinchuan as a strategic partner particularly given Jinchuan’s leading position in China’s commodity markets which are growing rapidly. We are excited by the potential for expanding the relationship between the companies in relation to other base metal projects.”

Michelmore said that the recently announced merger between Zinifex and Oxiana opens up a whole new suite of possibilities to extend the relationship with Jinchuan. “The merged company will be a substantial producer of copper, nickel, and zinc which are all metals that are part of Jinchuan’s business. These markets present multiple opportunities to grow together.”

Zinifex assumes a number of the commitments with Jinchuan through its acquisition of Allegiance, including:

  1. Zinifex will implement Allegiance’s commitments under the “Agreement for the Purchase and Sale of Nickel Concentrate” between Allegiance and Jinchuan, dated April 2006, despite any changes which have occurred in respect of Allegiance, including but not limited to delisting, shareholders’ changing, capital reorganisation, company’s merger and acquisition etc. The first delivery of concentrate from the Avebury nickel mine to Jinchuan is expected in June or July 2008.
  2. Zinifex will also implement Allegiance’s commitments under the “Agreement for Purchase and Sale of All Mineral Products Tasmania Projects (other than Avebury)” between Allegiance and Jinchuan, also dated April 2006. Zinifex undertakes that all the nickel resources discovered in Tasmania within the Agreement area will be produced and delivered to Jinchuan in accordance with the Agreement. Mineral products that are produced from Zinifex’s Rosebery mine and any discoveries arising on Zinifex’s existing Tasmanian exploration tenements are excluded from the above Agreement.
  3. Plans to expand nickel production at Avebury and increase exploration with the aim of extending the mine life. All of the increased output would be delivered to Jinchuan under the existing supply contract.
  4. Enhancing the performance of Avebury and the joint expertise in nickel mining and processing, through technical collaboration, sharing of operating information and bilateral site visits.