Silkroad Nickel subsidiary signs mining exploration deal worth over S$90m with units of China state-owned firm

CATALIST-LISTED Silkroad Nickel, an Indonesian nickel mining group, on Monday said that its subsidiary, Teknik Alum Service, has signed a new long-term mining exploration agreement worth more than S$90 million with Sinohydro Corporation and Sepco II Indo to produce at least six million committed tonnes of nickel ore under a five-year fixed price exploration agreement.

The agreement includes the completion of all land acquisitions and applications of necessary licences and permits, as well as providing the mining contractor, Sinohydro and Sepco II Indo, with the necessary data of the mining area.

The mining contractor in turn is responsible for excavating and transporting the overburden, providing the mining equipment, technical assistance, personnel and support needed to produce the nickel ore, maintaining the roads to be used for transporting the nickel ore, and transporting the nickel ore.

The agreement also states that if Silkroad Nickel fails to perform its responsibilities and causes losses to the mining contractor, the group shall compensate the latter for the losses and vice versa.

The mining contractor has committed to produce and deliver a minimum of 1.2 million tonnes of nickel ore annually to the group, upon completion of certain preparatory activities within six months. The price per tonne of nickel ore has been fixed and shall be valid for the five-year period.

Sinohydro is owned by Power Construction Corporation of China, a wholly state-owned company of China, and one of the world's top five largest contractors and engineering companies. Sepco is a company in Indonesia, owned by Power Construction.

Hong Kah Ing, executive director and CEO of Silkroad Nickel said: "This agreement gives us the impetus required to ramp up our production levels to fulfil the requirements of our offtake contracts and start the  exploration of new areas within our concession."