Asia Now Resources has signed a Heads of Agreement with Zinifex Australia Limited to form a joint venture to explore in China.

The HOA calls for the two companies to jointly fund exploration for zinc-silver-lead base metal deposits throughout China with an initial budget of combined cash and in-kind contribution of US$1.5 million. Zinifex will contribute cash and Asia Now, which will manage the alliance, will make contributions in kind including the services of its exploration team.

Asia Now president Kaihau Yang says: "I am very pleased that we will be working with one of the world"s premier mining companies to explore for a commodity that is in extremely high demand in China and elsewhere.

"This alliance adds another dimension to Asia Now's exploration activities and allows us to leverage our expertise in China to identify and acquire additional high-quality projects."

Under the terms of the HOA, Asia Now will identity and arrange for the acquisition of an initial interest in exploration targets that it will present to Zinifex. Targets that Zinifex selects for further exploration will become projects of the alliance. Asia Now will be free to proceed with exploration on its own behalf on those targets that Zinifex does not select.

Zinifex will solely fund exploration on the projects it selects, diluting Asia Now from an original 50% interest to 30%. Asia Now can then maintain its 30% interest by funding exploration on a pro-rata basis or be further diluted to a 10% interest which it can choose to maintain or convert to a 1.5% net smelter royalty.

If Asia Now's interest falls below 30%, but before it is diluted to 10%, Asia Now can elect to regain a 30% interest by paying Zinifex two times the amount it would have spent to maintain its interest at 30%.

The two companies anticipate signing a final agreement by June 1 this year, but in the meantime plan to begin working immediately under the HOA.