Canada's Inco has agreed a �1.7 million option and joint venture with Alba Mineral Resources over a Scottish nickel project .

The agreement gives Inco, one of the world's largest nickel producers, the right to earn 60 per cent of the Arthrath nickel, copper and platinum group metals project in Aberdeenshire, by spending �1.7 million over four years. AIM-quoted Alba says Arthrath, where exploration director Wilson Robb went on field studies during his university days, has potential for 'high-grade massive sulphide bodies', which past prospectors, including Rio Tinto, 'did not adequately test'.

If Inco, which is only interested in potentially major projects, decides to exercise its right and spend the money over four years, the Canadian group can then earn another 10 per cent by funding a bankable feasibility study to take Arthrath to production. Thereafter, both parties must contribute proportionately to development costs, unless either decides instead to dilute its stake down to 10 per cent, which will then be converted into a 2 per cent royalty — a course which Alba is likely to consider if all goes well.

Under the deal, Inco has the right to earn into Arthrath but is under no obligation to do anything at all. But there have already been technical exchanges and the two companies will meet next month, at which point Alba says it will present Inco with 20 exploration targets.

Alba, which raised �1 million at 5.25p at last year's float and later raised �100,000 at 8p from Altius Minerals to fund joint exploration in Scandinavia, says it expects to return to the market at some stage for more. The company, which lost �193,176 last year, is also working on two other projects, one of which is thought to be a uranium play.

At 11.13p, valuing the company at �6.7 million, Alba shares have speculative potential.


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Alba Mineral Resources	AIM	�1.75m	2.63p	0.00p
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Inco deal for Alba			17/05/2006