Victory West to acquire stake in S. Sulawesi nickel project

Australia-listed firm Victory West Moly Limited said on Friday that it has entered into a binding agreement with Oceantide Investments Pty Ltd for the right to acquire within the next 60 days, Oceantide?s rights to a highly prospective DSO Nickel Project in South Sulawesi.

Oceantide has secured the right to acquire 70% equity interest in a prospective nickel exploration IUP concession held by Indonesian entity PT. Primara Utama Lestari (PT PUL) through making certain payments in a combination of cash and scrip and sole funding the project to production. To date, Oceantide has helped fund PT PUL?s operational commitments and has undertaken initial legal and title due diligence as well as undertaken a preliminary scoping study assessment of the project.

The IUP concession area covers approximately 1,608 hectares and is located in Malili East Luwu in South Sulawesi.

In consideration for the rights to acquire Oceantide?s right in relation to the Luwu Nickel Project, the company has loaned Oceantide US$100,000 on commercial terms. The proceeds from the Loan have been applied for working capital for the Luwu Nickel Project.

Negotiation of final commercial terms and conditions of the acquisition are progressing in parallel with due diligence currently being undertaken. In the event a transaction is not consummated in 60 days, this loan is to be repaid in full by Oceantide.

Victory?s CEO, Robert Hyndes, said the Luwu Nickel Project opportunity is in line with the Boards? intention to source, secure and extract value from metal projects in South East Asia, that have the potential to add significant market appeal and shareholder value.

Initial due diligence has identified that the Luwu Nickel Project has the potential to develop into a producing nickel mining operation in the very near term. The historic exploration data indicates the project is underpinned by robust economics and a favourable geographic position given its close proximity to the coast. Expectations of very low cap-ex assist in turning this opportunity into a developing mine within a short time frame providing significant and steady cash flows over a period of several years.?

?We look forward to finalising our due diligence and, subject to it meeting our investment criteria, taking a majority interest in the project and moving it into production within the coming 12 months.?

Since 2008, PT PUL has undertaken various exploration work programs including drilling 85 shallow holes at 200m x 200m spacing as well as various trenching and test pitting programs. Results of this work have allowed PT PUL to report an initial Exploration Target of 35-45Mt @ 1.2% to 1.6% Ni in both the limonite and saprolite zones. Exploration to date has covered less than 50% of the concession, therefore further exploration is expected to generate significant upside.

In parallel, the company will continue to develop its flagship Malala Molybdenum Project in Central Sulawesi as well as seeking additional high-value projects with the intention of building shareholder value, it said. (kanti)