HONG KONG - AUSTRALIA - Noble Group invests in Windimurra vanadium project

Ferro-alloys company Precious Metals Australia Limited has received a significant boost as it advances re-development of the $175 million Windimurra Vanadium mine in Western Australia after Hong Kong-based Noble Group Limited exercised its option to provide $21.7 million in funding and acquire a 10% direct equity stake in the Windimurra Project.

PMA said that Noble, one of the world's leading supply chain managers, had formally advised PMA that it was satisfied with the results of its due-diligence investigation of the Windimurra Mine and of PMA and had exercised its option to acquire a 10% direct equity stake in the Windimurra Project for a consideration of Aus$13.5 million.

Noble has also exercised its option to provide an unlisted, unsecured convertible note with a face value of A$8.2 million to PMA. The convertible note has a 3-year term and is convertible into 3,728,548 fully-paid PMA shares, equivalent to an issue price Aus$2.20 per share.

Noble formally exercised its 60-day option to subscribe for 10% of the issued capital of PMA's subsidiary , Windimurra Vanadium Pty Ltd (formerly PMA (Windimurra) Pty Ltd), through its subsidiary Noble Resources Limited.

The acquisition of a direct equity stake in the Windimurra Project by Noble represents a significant step forward for the project, following the recently announced Vanadium Sales & Marketing Agreement with Noble which will underpin the financing and development of the Project.

Under this agreement, Noble has agreed to buy the entire output of the Windimurra mine, at prevailing market prices. During the first seven years of production, Noble will pay a minimum price for vanadium equal to the cash cost of producing vanadium at Windimurra based on the forecast production schedule - providing a solid price floor for the project and effectively underwriting financing for the $175 million project.

PMA managing director, Roderick Smith, says Noble Group's decision to exercise its option to acquire the 10% equity stake represented a significant vote of confidence in the Windimurra Project following completion of detailed due diligence.

"We are delighted to have Noble as direct partners in the project, further complementing the long-term sales and off-take agreement which we announced earlier this year," Roderick Smith says.

Roderick Smith says the alliance has now cemented PMA's strategic alliance with one of the world's leading commodities trading and supply chain managers. This alliance will ensure the development of the Windimurra Project as a competitive long-life, world-class mine producing high-quality vanadium at a sustainable cost."

"The involvement of Noble Group adds significant value to our project by applying their global contacts and expertise to the marketing of Windimurra Vanadium," Roderick Smith says. "Noble will exclusively market and handle all distribution logistics for Windimurra Vanadium worldwide through its international network of offices."

"Noble's global experience will complement our own marketing team, which will focus on servicing end users requirements, new high-value product development and promoting Windimurra Vanadium as a product of choice and strong brand within the international vanadium industry," he said.

PMA is aiming to complete financing for the Windimurra Project within the next two months, with construction expected to start next month and first production in the last quarter of next year.