Chinese conglomerate China Guangshou Group Corp has thrown its weight behind Perth junior Victory West Moly's Malala molybdenum project in Indonesia, potentially paving the way for production to start within two years.
Victory West today said CGGC had entered a memorandum of agreement to take a 65 per cent stake in the venture by sole funding all costs up to the start of large scale production, likely to be in the order of $300 million.
The deal will leave Victory West with a 27.5 per cent free carried interest in the project.
The agreement was struck after CGGC completed detailed due diligence and requires the Chinese group to pay a $US1 million commitment fee to Victory West on receipt of Indonesian approvals.
CGGC is also required to meet a number of key milestones, starting with a 10,000m drilling campaign, mine and plant development, and deliver "early production opportunities" within 24 months.
It will also be required to commence large scale production by 2016 provided a resource of at least 150 million tonnes grading 840 parts per million molybdenum has been confirmed.
Victory West chief executive Robert Hyndes said CGGC was an experienced mining development group with substantial moly operations in China and North Korea, and their involvement would enable the company to fully realise the potential of the Malala project.
Victory West shares were trading 4 per cent higher at 12 cents in mid-afternoon trade.
