MBMI forms ‘relationship’ with HGMG

Vancouver — A Chinese smelting group has agreed to invest US$4 million to acquire a 16% toehold interest in the Bethlehem and Alpha nickel projects held by MBMI Resources (MBR-V, MBRTF-O) in the Philippines. The transaction is still subject to a formal agreement and regulatory and board approvals.

Zhejiang Huaguang Smelting Group (HGMG) also secured an option to increase its interest in the projects to 20% by investing another US$1 million. The privately owned Chinese steel company operates three blast furnaces in China, and consumes 1.2 million tonnes of direct-shipping ore (DSO) each year to produce a ferro-nickel product used by stainless steel producers.

MBMI will use the funds to explore and develop the properties situated near the town of Narra on Palawan Island. The narrow island is well known for its nickel-laterite deposits and is undergoing an exploration and mining revival, spurred by increasing nickel demand from China and other booming Asian economies.

MBMI has four nickel projects on Palawan Island, and is in the process of acquiring four more projects in Samar province, on a neighbouring island. The company’s goal is to become a supplier of high-grade nickel materials to primary nickel consumers in Asia. The initial focus is to outline and develop resources suitable for DSO to Asian customers.

Several nickel-laterite mines have been developed by other operators on Palawan Island, with the largest being the Coral Bay project owned 54% by Sumitomo Metal Mining of Japan. Coral Bay has proposed plans to double output to 20,000 tonnes in the next few years in response to growing demand from Asia.

MBMI’s 34-sq.-km Bethlehem project is near Coral Bay. The company has seven rigs working on-site to define resources in areas where “attractive potential economic zones” were previously identified. MBMI is trying to determine the viability of a DSO operation through an initial small-scale mining program at Bethlehem.

An exploration program is also under way on the Alpha property, with four rigs mobilized for the initial 1,500-metre program. The goal here is to confirm resources for a potential small-scale mining operation within two historically defined deposits. The area of interest was previously identified by analyzing historical drill results from the known deposits, a process that also identified new targets on the surrounding land package.

The Alpha project is contiguous to a small-scale DSO operation owned and operated by a Philippine company.

MBMI has 36.6 million shares outstanding (45.3 million fully diluted).