Victory West Moly Limited (ASX:VWM) (FRA:R1E) ('VWM' or the 'Company') announce the signing of a binding Memorandum of Understanding ('MOU') with China Guangshou Group Corp ('CGGC') that, subject to due diligence, is to acquire a 65% interest in the Malala Molybdenum Project. 

CGGC is to commit to funding 100% of the exploration, development and exploitation costs required to take the Malala Molybdenum project into Production ('Sole Funding Commitment'). 

Under the proposed agreement, Victory West and the Company's local BUMD (Regency owned enterprise) partner are to be 'free carried' to large scale production. As a result, Victory West and the BUMD will hold a direct or indirect interest of 27.5% and 5% respectively in the Malala Molybdenum Project. A further 2.5% interest will be acquired by local Chinese interests. 

VWM and CGGC (the 'Parties') agree to work together to determine the most efficient structure to hold their respective project interests (direct or indirect). 

The Parties have agreed to a 25 day completion period under the MOU, during which time the Parties will finalise legal and tax due diligence and enter into a Memorandum of Agreement ('MOA') that will set out the detailed terms of the proposed transaction. Upon execution of the MOA, CGGC is to make a payment of US$500,000, and an additional payment of US$500,000 is payable within 70 days from the signing of the initial MOU.

In summary the key MOU milestones are: 

• An initial exploration program of 10,000 metres (minimum) to be undertaken and reviewed by a geological consulting group of international standard. 
• Definition of a suitable 43-101 JORC resource that is capable of commercial production. 
• Delivery of early production opportunities from high grade mineralization identified during exploration within 24 months. 
• Development and construction of the Project for commercial production including mine development, processing plant and associated infrastructure. 
• Minimum sustainable production target of 400,000 tonnes per month by 2016. 

In the event that CGGC does not meet the agreed milestones within the agreed timeframes, the CGGC interest will be transferred back to the Company.

It is expected that an aggressive timetable to production will be undertaken (subject to local regulatory requirements) with an initial focus on identifying, defining and exploiting early production opportunities from high grade mineralization identified through early targeted exploration ('Small Scale Production'). The parties agree that any profits generated from Small Scale Production activities are to be reinvested to develop larger scale production mining projects with a minimum sustainable production target of 5 million tonnes per annum processing. 

VWM's CEO, Robert Hyndes said 'over the last 6 months, we have been in active discussions with potential partners that have the financial strength, mining experience, and international standing to enable VWM to extract full value from the Malala Molybdenum Project. VWM is delighted to have attracted such a strong partner as CGGC who are not only experienced Molybdenum miners but have the global reach and financial capability to exploit the Project to its full potential and develop the resource into a world-class project'. 

The Project transaction is subject to specified conditions including Australian and Chinese regulatory approvals, due diligence and VWM shareholder approval.

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