Jinchuan Group Limited has increased its interest in Allegiance Mining with funds to be put towards further development of the Avebury Nickel Project in Tasmania.

Allegiance has entered into agreements which will see Jinchuan subscribe for 48,123,044 fully paid ordinary shares in at an issue price of A$0.80 per share to raise A$38,498,435.

The issue of shares will extinguish all obligations under Jinchuan's A$5 million Subordinated Loan and thereby extinguish that loan.This will see Jinchuan own 11.03% of the issued shares in Allegiance.

Jinchuan and Allegiance have also entered into a framework offtake agreement for all further metalliferous discoveries made in Tasmania.

Allegiance director and CFO David Deitz said: "These funds will put us in a very strong financial position as we move closer towards production by the end of the year.

Allegiance chairman Tony Howland-Rose added: "Jinchuan has been very supportive of our project and has now asked for the rest of our nickel in Tasmania. We welcome them as our major shareholder."

The agreements are subject to and conditional upon statutory approvals by the Provincial Government of Gansu Province and the Central Government of the People's Republic of China. On finalisation, a Jinchuan representative will be invited to join the Board of Allegiance Mining.