Itochu Corp., a multibillion-dollar Japanese conglomerate has agreed to invest as much as $40 million to earn up to a 75 percent stake in Pure Nickel's 750-square-kilometer, high-grade nickel-copper-platinum group element Man property in Alaska.

Pure Nickel President and CEO David McPherson said, ""Itochu has a solid reputation for its long-term vision. Itochu's many decades of success speak volumes about the quality of the organization and its people. We have been fervent believers in the potential of Man, and it is extremely gratifying that Itochu has embraced our belief in the property."

Under terms of the agreement, Itochu can earn a 60 percent interest in Man by spending $30 million on exploration over the first six years of the option period. Once Itochu has earned a 60 percent interest, the Tokyo-based company has the option to earn an additional 15 percent interest in the property by investing another $10 million in exploration during the seventh year of the agreement. The pact also provides for acceleration of the earn-in timetable.

Toronto-based Pure Nickel will receive a 10 percent management fee to operate exploration activities at the Man property, which is located 400 kilometers, or 248 miles, northeast of Anchorage.

Alpha and Beta drilled

In 2007 Pure Nickel completed a nine-hole, 3,359-meter drill program at Man after gaining a 100 percent interest in the property as a result of a reverse takeover of Nevada Star Resources Corp. that February.

The 2007 phase 1 drilling at Man investigated six areas over a 19.8-kilometer-long, or 12-mile-long, strike length of the property's Alpha Intrusive Complex. Drill hole MAN-PNI-001 intersected 77.4 meters of disseminated sulfides with an average grade of 0.26 percent nickel, 0.12 percent copper, 0.139 grams per ton palladium and .062 grams per ton platinum. Pure Nickel said it abandoned the hole at 659 meters, while still in mineralization, due to challenges encountered with core recovery.

This year, the junior shifted its focus to the Beta Complex, located about eight kilometers, or 5 miles, south of Alpha. McPherson told Mining News that the company completed a modest drill program at the Beta Complex this year. Results from the drilling are pending.

Four complexes in '09

McPherson said the company is working on the 2009 exploration program and budget for the Man project. Both the Alpha and Beta complexes are being considered as drill targets in 2009, and drilling could happen on both areas, he said.

According to McPherson, in addition to drilling the company is considering doing property-wide ground work. This includes additional work at the Canwell and Rainy Complexes in the northern part of the property.

Itochu has agreed to spend up to $6.5 million at Man during 2008 and 2009; this includes reimbursing Pure Nickel for expenditures incurred this year at the project. On an ongoing basis, exploration activity will be funded through 2014 to a total of $40 million, subject to Itochu exercising its option to continue at the end of 2009 and 2013.

Worldwide search turns up Man

Satoshi Kondo, Itochu group manager of Mineral Resource Development Group, said, "We are very pleased to begin our partnership with Pure Nickel, which has come about after considerable review of the potential of the Man property. Our organization has been studying potential exploration projects of platinum group metals and base (metals) around the world. The Man project has a high probability of becoming a world-class project and fits well with our policies and concepts. Importantly, we are very confident and comfortable with Pure Nickel's team and the relationships we have mutually developed that allowed our review and negotiations to go very smoothly."

Tokyo-based Itochu is a publicly listed 150-year-old conglomerate with multiple divisions operated through 17 offices in Japan and 139 overseas locations. The joint venture with Pure Nickel is through Itochu's Metals, Mineral Resources & Coal Division, Energy, Metals & Minerals Company.

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