Centrasia up on word of Russian nickel acquisition

Centrasia Mining (CTM-V, CTMHF-O) made big market gains after announcing it has agreed to acquire three nickel-copper properties in Russia.

The key property is only being referred to as The Deposit, and the vendor has requested not be named, but Centrasia describes the Deposit as being in the advanced stage.

The news sent the Vancouver-based company up 25% or 34 to $1.69 on roughly 1.5 million shares traded. The company has roughly 22 million shares outstanding.

While Centrasia had been known for gold exploration along the Tien Shan Gold Belt which extends from Uzbekistan in the west into China and Mongolia to the east the new acquisition marks a shift towards the booming base metals market.

We always kept our eyes open to new opportunities and this one just presented itself at the right time, says Brenda Dayton a spokesperson for Centrasia.

The deal will see Centrasia make an initial payment of US$6 million and 12.5 million shares with another US$5 million in cash coming in 2008, and US$1.5 million in 2009. Centrasia will hold a 100% stake in the projects.

The transaction is subject to the completion of a NI 43-101 compliant technical report as well as regulatory approval, shareholder approval, and a financing.

As part of the agreement Centrasia will loan the vendor US$200,000.

If the transaction does not close by June 25, 2007, Centrasia may have to pay a penalty which will include forgiving the loan and increasing the cash to be paid on closing by another US$1 million.

The Deposit was discovered in 1947 and sporadically drilled from 1950 until 1982. It has a historic Soviet classified C2 and P1 resource calculation with a cut-off of 0.3% copper the estimates are 179, 000 tonnes grading 0.38% nickel and 0.13% copper for 678,400 tonnes of nickel and 235,000 tonnes of copper.

But, the company admits, the quantity and grade is conceptual and the work done on the property is not sufficient enough define a mineral resource.

The Deposit is located approximately 180 km west of Murmansk in the Kola Peninsula of northwestern Russia. Centrasia says the area has good infrastructure by way of graded gravel roads and access to power, water and a local work force.

Norilsk has a nickel smelter located in the nearby city of Nikel.

The company says mineralization occurs on the Deposit as disseminated sulfides in a sequence of ultramafic flows, intrusives and sediments. The Deposit outcrops at surface and appears amenable to open pit mining.

The two other projects are sulphide nickel-copper deposits in the Kola Peninsula. Centrasia describes the properties as promising, early stage exploration targets.

SRK Engineering have been hired to complete a report on the Deposit and Centrasia anticipates it will be completed by mid-June of this year.

The company says it will immediately begin a program to verify and convert the historic Soviet resource to a NI 43-101 compliant resource, once the deal is closed.