Silkroad Nickel signs mining exploration and contractor agreement with Sinohydro

SGX-Catalist listed Silkroad Nickel Ltd, an Indonesian nickel mining group, is pleased to announce that its subsidiary, PT Teknik Alum Service has entered into a new long-
term mining exploration agreement with Sinohydro Corporation Ltd and PT Sepco II Indo, and together with Sinohydro, collectively known as the mining contractor on 5 January 2019. The agreement provides for, inter alia, the following:
• the agreement is for a period of five years from the commencement date, which refers to the date when the group issues the notice to proceed;
• the Group is responsible for, inter alia, (i) completing all land acquisition related matters; (ii) applying and obtaining all necessary licenses and permits; and (iii)
providing the mining contractor with the necessary data of the mining area;
• the mining contractor is responsible for, inter alia, (i) excavating and transporting the overburden; (ii) providing the mining equipment, technical assistance, personnel and support needed to produce the nickel ore; (iii) maintaining the roads to be used for transporting the nickel ore; and (iv) transporting the nickel ore; if the group fails to perform its responsibilities under the agreement and causes losses to the mining contractor, then the group shall compensate the mining contractor for the losses and vice versa
The mining contractor has committed to produce and deliver a minimum of 1.2 Mt of nickel ore annually to the group, “upon completion of certain preparatory activities within six months from the commencement date. Pursuant to the terms of the agreement, if the mining contractor fails to deliver the nickel ore according to the aforesaid production amount and schedule, the group can terminate the agreement and the mining xontractor shall compensate the group for all of its economic losses; the price per tonne of nickel ore has been fixed and shall be valid and remain in force for the five-year period, assuming certain conditions under the agreement are met; and the contract value, based on the fixed price per tonne as agreed under the agreement and the 6 Mt of nickel ore committed to be produced by the mining contractor, is estimated to be in excess of S$90 million.
Sinohydro is owned by Power Construction Corporation of China, a wholly state-owned company of the People’s Republic of China. PowerChina is an integrated construction group and its principal businesses include energy, power, construction equipment and engineering and operation management. PT Sepco is a company in Indonesia, owned by
PowerChina. Hong Kah Ing, Executive Director and Chief Executive Officer of Silkroad Nickel commented: “We are pleased to announce this agreement with PowerChina which is amongst the world’s top five largest contractors and engineering companies. PowerChina is also involved in mining activities worldwide and this agreement gives us the impetus required to ramp up our production levels to fulfill the requirements of our offtake contracts and start the exploration of new areas within our concession.”