The deal, announced last week, marks the first direct involvement of a Chinese company in the potential development of a uranium deposit in Australia.

The terms of the MOU grant Sinosteel an exclusivity period of three months, extendable to five months to sign legally binding documents to allow regulatory approvals to be finalised, including approval from Australia’s Foreign Investment Review Board.

For this period, Sinosteel has given $1.5 million to PepinNini and a further $1 million if it is extended, and has agreed to immediately invest $1.65 million for 3.3 million shares in PepinNini.

Once regulatory approvals are gained, Sinosteel will pay $30.5 million for a 60 per cent stake in the new company that holds the project and tenements. The company has agreed to commit a further $6 million for non-uranium exploration over two years.

The deposits are at Crocker Well and Mt Victoria and form part of a geological feature called the Curnamona Province covering 2,385 square kilometres of north-eastern South Australia. These deposits include approximately 7.4 million kg of uranium.

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There are also potentially other exploitable deposits of copper, gold, lead, zinc and rare elements such as thorium.

Chambers & Co’s senior partner on the deal, Robin Chambers, declined to comment due to the “sensitivity” of the transaction to his clients.