The Bermuda-registered company Zambezi Nickel Ltd has signed a contract with the metals giant BHP- Billiton under which Zambezi Nickel will acquire two prospecting licences in the central Mozambican province of Manica.

The agreement concerns the Mavita Nickel Project, 56 kilometres from the Manica provincial capital, Chimoio. BHP- Billiton is to transfer title to the two Mavita prospecting licences to Zambezi Nickel which will then be the 100 per cent owner and operator of the project.

According to a press release from Zambezi Nickel, it has agreed to spend at least 150,000 US dollars on the project over the next 18 months. BHP-Billiton retains the option to “clawback” the entire project any time after a threshold of 200,000 tonnes of “contained nickel equivalent metal” has been reached.

Should it exercise this option, BHP-Billiton will pay Zambezi 2.5 times everything it has spent on the project, plus a three per cent net smelter return during the life of the mine. If BHP-Billiton does not exercise its clawback option, then it will be Zambezi that pays BHP-Billiton the three per cent.

Under the agreement, BHP-Billiton has first right to purchase, on commercial terms, any metals found at the Mavita site.

The Zambezi Chief Executive Officer, Paul Rankine, cited in the release, said the Mavita deal “brings additional value to the company’s portfolio at no immediate cost”.

Aeromagnetic and geochemical analyses have already been undertaken at the site which have shown the presence of nickel, though nothing has been drilled yet.

Zambezi Nickel, although registered in Bermuda, is 100 per cent owned by the Australian company, Zambezi Resources. To date, Zambezi Nickel’s main operations have been in Zambia.