China's Guangdong Guangxin Mining Resource Group, or GMR, has signed a memorandum of framework cooperation with Australia's KBL Mining for taking a 25% interest in the latter's Mineral Hill copper project in New South Wales, KBL said Thursday.

Under the MOU, GMR will pay A$80 million ($80.6 million) for the purchase of a 25% joint-venture interest in KBL's wholly-owned Mineral Hill mine, including the Iron Duke exploration license.

As part of the deal, the Chinese party will be entitled to offtake all of KBL's remaining 75% share of Mineral Hill's life-of-mine copper concentrate output at a 25% discount to prevailing LME prices.

The MOU package also covers the subscription by GMR for a 15% fully diluted shareholding in KBL, formerly known as Kimberley Metals. Completion of the transaction is conditional upon approvals from the Australian and Chinese governments.

GMR, a subsidiary of state-owned Guangdong Guangxin Holding, the largest foreign trade group in the prosperous Guangdong province in South China, is the major platform for the parent company's mining investments.

The funds generated would be utilized by KBL in expanding and upgrading the Mineral Hill project; exploring other gold and copper targets and advancing the Iron Duke copper-gold project 50 km northeast of Mineral Hill.

KBL also intends to start developing in 2012 its Sorby Hills silver-lead-zinc project in Western Australia, currently in its final stages of permitting.

A "long term, stable partner for KBL" in the form of GMR would "assist our expansion from a single-mine company to a medium-sized multi-mine corporation," KBL's executive chairman, Jim Wall, said in a statement.

The newly recommissioned Mineral Hill mine shipped its first cargo of copper concentrates in October to China's third-largest copper smelter Yunnan Copper, which has received three Mineral Hill shipments so far totaling 2,707 mt. A fourth shipment to Yunnan is scheduled to depart Thursday.

The Mineral Hill refurbishment project includes a copper concentrate plant with ore processing capacity of 250,000 mt/year. KBL is targeting a 10% increase in mill feed to 275,000 mt/year from January, which is expected to boost copper metal production from 4,900 mt/year to 5,200 mt/year in concentrate.

The Mineral Hill mine was idled in 2005 after producing a total of 2.1 million mt ore at 6.5 g/mt gold and 1.14% copper.