Toledo Mining Corporation Plc has signed a memorandum of understanding with China's biggest nickel producer that should lead to a strategic alliance for the exploration, mining, processing and sale of nickel products from Toledo's nickel interests on Palawan Island, the Philippines.
Under the MOU, Jinchuan Group Ltd will subscribe for new Toledo ordinary shares representing 29.9% of its enlarged issued share capital. Jinchuan will pay 42 pence per share, raising over £7.4m ($11.2m).
Jinchuan will also enter into a direct ore shipping sales contract to buy at least 1Mtpa of nickel ore from 2013, increasing to at least Mtpa in 2016.
The Chinese firm will provide a pre-payment purchase facility to assist with working capital associated with the fulfilment of these contracts. It will also assume management of Toledo's Philippines interests and will nominate two directors to Toledo's board.
Toledo meanwhile will win the right to co-invest in Jinchuan's planned ferro-nickel smelter in China's Guangxi Province.
The two companies hope to turn the MOU into a legally binding deal by the end of August, with shareholder approval being sought shortly afterwards.
Story provided by StockMarketWire.com
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