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TNG Ltd banks China's ECE $6.6m funding, to underpin Mount Peake development

TNG Limited (ASX: TNG) has attracted a $6.6 million capital injection from a subsidiary of a privately owned Chinese company following the completion of the first stage of the previously announced A$13.4 million subscription agreement with the East China Mineral Exploration & Development Bureau (ECE).

The funds raised will bolster a key pilot plant test work program for TNG’s TIVAN™ hydrometallurgical process for its Mount Peake Iron-Vanadium Project in the Northern Territory, one of Australia’s largest undeveloped vanadium projects.

TNG signed a variation deed yesterday in relation to the subscription agreement announced on 8 November 2011, with Ao-Zhong International Mineral Resources, a subsidiary of East China Mineral Exploration & Development Bureau, and Aosu Investment and Development Co.

The variation deed allows Aosu, which is an Australian subsidiary of a private Chinese investment group introduced by East China Mineral Exploration & Development Bureau, to complete its part of the transaction immediately while Australian foreign investment approval is awaited for Ao-Zhong’s investment.

TNG managing director Paul Burton said the companies had worked well together in this process, giving the company certainty and clarity about its 2012 development plans.

Aosu has subscribed for and has been issued 59.8 million shares at $0.11 per share. TNG has used some of the funds to immediately repay the loan of $2 million (plus interest) owing to Aosu.

The loan was provided last year to supply interim working capital pending completion of the overall $13.4 million transaction.

The transaction with Ao-Zhong and Aosu was approved by shareholders at the extraordinary general meeting held on 21 December 2011 and all other approvals have been received.

Ao-Zhong submitted its application for foreign investment approval prior to Christmas, with the approval process expected to proceed in early 2012.

Once foreign investment approval is received, Ao-Zhong will complete an additional investment of $6.8 million.

Under the variation deed, the date for satisfaction of the foreign investment approval condition in the subscription agreement with Ao-Zhong has been extended from 31 December 2011 to 31 March 2012.

When this part of the transaction is completed, Ao-Zhong can nominate a further non-executive director who will also become chairperson of TNG.


Director Appointment

Zhigang Wang has been appointed as a non-executive director, effective from completion of the investment by Aosu.

Wang is Chairman of Aosu and holds appointments as director of Technology Management Department of Suzhou Wanlong Electric Group Co., and is a director of Suzhou Beijia Investment Co.

Suzhou Wanlong Electric Group Co. holds 51% of the issued capital of Aosu and Suzhou Beijia Investment Co. holds the remaining 49%.


De-Risking Mount Peake


With a JORC resource estimate inventory to more than 70% in the Indicated category, and moving from a Scoping Study accuracy of +-50% to a Pre-Feasibility Study of +-25% accuracy, and securing Chinese partner East China Mineral Exploration & Development Bureau to support and develop the project, TNG has significantly de-risked the project moving forward.
 
Interim PFS results demonstrate the potential for net annual cash flows of $151.3 million over a mine life of more than 17 years and an internal rate of return of 25.7% from the proposed world-scale Mount Peake Iron-Vanadium-Titanium Project.

The PFS points to a 2.5 million tonne per annum operation expanding to 5 million tonnes per annum  after four years and an average annual production of 14,200 tonnes per annum vanadium oxide, 379,000 tonnes per annum titanium dioxide and 1.2 million tonnes iron.