Jinchuan Nickel Group has paid Aus$33.04 million to earn an 11% interest in emerging Australian nickel producer Allegiance Mining.

Jinchuan is China"s largest and the world"s fifth largest nickel producer and has contracted to buy all nickel concentrates produced from Allegiance"s nickel mine at Avebury and any future nickel operations by Allegiance in Tasmania.

Allegiance chairman Tony Howland-Rose says: "The capital injection by the Jinchuan Group together with approval for bank finance is a pleasant milestone. Allegiance is delighted to have Jinchuan as our major shareholder. The funding now in place completes this phase of our capital raising program."

Near mine surface exploration at Avebury has focused on extending resources, particularly along strike in the East Avebury-Saxon areas and in the Bintje area. An intensive underground infill drilling program designed to convert Inferred Resources to Indicated Resources has also started.

The surface exploration drilling has returned significant mineralized intercepts beyond the limits of the current resource in all of the targeted areas. The underground resource infill drilling program is expected to finish in November 2007 with an updated resource estimate by December.

Tony Howland-Rose says: "We are well pleased with our drilling progress. Two underground rigs are employed on infill-drilling prior to mining and for both exploration and resource up-grade purposes. The results are most encouraging. We are now 'scoping out the province' to ascertain optimum mine life and with potential plant expansion in mind.

"The drilling data would, subject always to confirmation by infill drilling, be expected to increase the resource by about 1 to 1.3 million tonnes at grades of 0.8% to 1.0% nickel in due course. This could potentially add an additional 10,000 tonnes of nickel metal to the present resource."