St George Signs Nickel Exploration Deal With BHP Billiton

Metals explorer St George Mining Ltd. (SGQ.AU) said Monday it has signed a deal that would give BHP Billiton Ltd. (BHP) rights to nickel on a property in Western Australia state in exchange for funding exploration work.

St George said the agreement gives BHP a two-year option over nickel rights at nine tenements covering about 498 square kilometers at the East Laverton property, 200 kilometers northeast of Kalgoorlie, provided it spends A$600,000 on exploration during this period. The option gives BHP the right to a 51% interest in nickel rights in the tenements, plus tenements covering a further 470 square kilometers, if it spends A$3 million over three years.

BHP can increase its interest to 70% by sole funding a bankable feasibility study, St George said.

"The farm-in agreement is a giant leap forward in exploring what St George Mining believes is a major, new nickel sulphide district," said John Prineas, chairman at St George.

The company, which listed on the Australian bourse in November, said it will retain the rights to gold and other metals found in the tenements.

-By Robb M. Stewart, Dow Jones Newswires; [phone]; [e-mail]