Thursday, 3 May, 2007

by Fulton Mak
The Standard

China's Hunan Nonferrous Metals Corp (2626) announced it is establishing three joint ventures with Australian exploration company Compass Resources to develop oxide and sulphide projects in Australia.

Hunan Nonferrous will put up about A$83 million (HK$538.6 million) toward two of the joint ventures, and its contribution to the third project will be determined upon completion of feasibility studies, the company said in a statement to the Hong Kong stock exchange.

The Changsha-based firm, the mainland's largest producer of indium, tungsten, antimony and lead, will hold 50 percent stakes in each joint venture. It did not give the size of the projects.

"Formal commencement of the joint ventures is subject to stamp duty assessment by the Northern Territory treasury," said Hunan Nonferrous chairman He Renchun, who expects the process to take several months.

Sydney-based Compass Resources NL has interests in base metals, gold and uranium projects, mainly in Australia's Northern Territory and New South Wales.

Wednesday's announcement came after the Hunan Nonferrous Metals Group, the parent of the Hong Kong- listed unit, withdrew last week from the Molyhil tungsten-molybdenum project with Australian metal firm Thor Mining.

It was expected the parent would inject the project into the listed subsidiary once the investment proceeded.

Hunan Nonferrous has agreed to provide advance funding of A$72 million to allow Compass Resources to complete the oxide plant.

Hunan Nonferrous executive director Chen Zhi Xin said last month the company will spend more than 1 billion yuan (HK$1.015 billion) in 2007 - up 20 to 25 percent from last year.

The company's shares closed Wednesday at HK$4.72, down 1.255 percent.