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Siburan Resources (ASX: SBU) has signed a Share Subscription Agreement with Hunan Australian Mining for Hunan to acquire a 19.9% stake in the company.
Hunan Australia Mining is a wholly owned subsidiary of the Hunan Province Zhonghe Mining Industry Development Co, which is owned by a China State Government enterprise.
The Hunan group is an Exploration Bureau with vast experience in exploring for Tungsten and Uranium.
The signing of the subscription agreement follows a Memorandum of Understanding entered into in November 2011 and due diligence by Hunan.
Siburan Resources managing director Noel Ong said: "We are delighted to have signed the Share Subscription Agreement which, when completed, will allow the company access to funds for the purposes of exploring and developing current projects, pursuing further resource opportunities and supplementing the company's working capital.
"We also look forward to engaging with the Hunan group as a strong strategic investor in the company, with their long history of experience and achievements in exploration."
The partnership with Hunan could see Siburan fast track it Kirwans Tungsten Project in New Zealand.
Key terms and approvals
Under the agreement, Hunan can subscribe for 20.6 million Siburan shares at $0.15 per share for total consideration of $3.09 million.
Following completion of the share placement, Hunan will have the right to nominate two directors to the board, and an application will be made to the ASX for official quotation of the shares issued.
Completion of this share placement will not take place until approval by Siburan shareholders as well as any relevant regulatory approvals by the ASX and the Foreign Investment Review Board.
A general meeting will be held no later than March 18, 2012, to seek shareholder approval.
Hunan will have the right to participate in future share placements, excluding shares issued under a participation exemption, to maintain its 19.83% interest in Siburan.
Kirwans Tungsten Project
Siburan's Kirwans project in New Zealand is highly prospective for tungsten and gold, with historical drilling intersections including 15 metres at 0.13% WO3 from 4 metres, 15 metres at 0.13% WO3 from 14 metres, and 5 metres at 0.15% WO3 from 33 metres.
A previous diamond drill hole reported an average grade of 0.05% WO3 from the surface for 263.2 metres, demonstrating the potential broad nature of the mineralisation.
Adding to the prospectivity of the project, rock chip samples from other tungsten targets within the project area have returned high grade values of up to 8% WO3 - which Siburan said will require drill testing.
Once the exploration permit for Kirwans has been granted, Siburan intends to commence diamond drilling programs to determine the strike and depth potential of the main tungsten mineralisation zone - which is expected to delineate the size and grade of the tungsten mineralisation.
The company hopes to move promptly towards a JORC Resource.