For personal use only

27 August 2010
The Manager
Company Announcements Office
Australian Securities Exchange Limited
Exchange Plaza
2 The Esplanade
PERTH WA 6000
Dear Shareholders

Victory West Moly to acquire a majority interest in highly prospective DSO Nickel
Project in South Sulawesi, Indonesia.
Key Highlights

The project is located in Malili East Luwu in South Sulawesi, Indonesia covering approximately 1,608
hectares
Prolific nickel laterite province with several existing major operations nearby including Rio Tintos 162Mt
project and PT Incos Sorowako 161Mt project.
Initial exploration target of 35-45Mt at 1.2% to 1.6% Ni*
Historical exploration work indicates potential low stripping ratio with well developed mineralisation at
surface. Significant upside through additional exploration
Close to port site (~3kms)
Potentially low cost and rapid ramp-up to commercial production and cash flow
Feasibility and Environmental Studies in progress for Production and Operational IUP (Exploitation)
concession application.
Robust market for Direct Shipping Ore (DSO) nickel ore and continued strong nickel demand from key
Asian markets
Technical and legal due diligence in progress expected to be completed within 6-8 weeks.

Transaction Summary
Victory West Moly Limited (ASX: VWM FSE: R1E) (VWM or the Company) is pleased to announce that it
has entered into a binding agreement (the Agreement) with Oceantide Investments Pty Ltd (Oceantide) for
the right to acquire within the next 60 days, subject to due diligence, Oceantides rights to a highly prospective
DSO Nickel Project in South Sulawesi, Indonesia (either through the acquisition of 100% of Oceantides equity
capital or 100% of Oceantides rights to the project).
Oceantide has secured the right to acquire 70% equity interest in a prospective nickel exploration IUP
concession held by Indonesian entity PT. Primara Utama Lestari (PT PUL) through making certain payments
in a combination of cash and scrip and sole funding the project to production. To date, Oceantide has helped
fund PT PULs operational commitments and has undertaken initial legal and title due diligence as well as
undertaken a preliminary scoping study assessment of the project.

For personal use only

The IUP concession area covers approximately 1,608 hectares and is located in Malili East Luwu in South
Sulawesi (the Luwu Nickel Project) (see Figure 1).
In consideration for the rights to acquire Oceantides right in relation to the Luwu Nickel Project, the Company
has loaned Oceantide US$100,000 on commercial terms. The proceeds from the Loan have been applied for
working capital for the Luwu Nickel Project.
Negotiation of final commercial terms and conditions of the acquisition are progressing in parallel with due
diligence currently being undertaken. In the event a transaction is not consummated in 60 days, this loan is to
be repaid in full by Oceantide.

Figure 1: Location map of Luwu Nickel Project and the Companys cornerstone Malala Molybdenum Project.

VWMs CEO, Mr. Robert Hyndes, said the Luwu Nickel Project opportunity is in line with the Boards intention
to source, secure and extract value from metal projects in South East Asia, that have the potential to add
significant market appeal and shareholder value.
Initial due diligence has identified that the Luwu Nickel Project has the potential to develop into a producing
nickel mining operation in the very near term. The historic exploration data indicates the project is underpinned
by robust economics and a favourable geographic position given its close proximity to the coast. Expectations
of very low cap-ex assist in turning this opportunity into a developing mine within a short time frame providing
significant and steady cash flows over a period of several years.

We look forward to finalising our due diligence and, subject to it meeting our investment criteria, taking a
majority interest in the project and moving it into production within the coming 12 months.

For personal use only

In parallel, the Company will continue to develop its flagship Malala Molybdenum Project as well as seeking
additional high-value projects with the intention of building shareholder value.
Strengthened Management Team
To assist in the completion of due diligence on the Project, the Company has engaged Mr. Rohan Erwin a
mining engineer with significant Indonesian experience and a track record in establishing green-field mining
assets and building mining projects.
Upon completion of the acquisition Mr. Erwin will be appointed to lead and manage the Project to production
and will work closely with the Companys Indonesia partner to deliver the project on time and on budget.
Luwu Nickel Project Summary
The Luwu Nickel Project concession area covers approximately 1,608 hectares in size and is located in Malili
East Luwu in South Sulawesi, Indonesia. The concession area is easily assessable by sea and land
transportation and is only 15 minutes drive from Malili, the capital of East Luwu Regency.
The geological formation is a typical example of tropical nickel laterite located within known nickel province. It
is closely located to a number of established laterite nickel projects and deposits, such as PT Incos 161
million tonne Sorowako project, and Rio Tintos 162 million project as detailed in Figure 2.

For personal use only

Figure 2: Location map of Luwu Nickel Project in location to other current nickel projects.

The concession was formally held by PT Inco (Inco) as part of a large regional nickel laterite holding. Inco
have been mining and processing lateritic nickel near Sorowako for more than 30 years and are one of the
worlds largest nickel producers. (See Figure 2 above). The project concession area is well located within 3km
of an identified port site. The concession has previously been logged with limited secondary re-growth.
Local Team
PT PUL has assembled an experienced local team including senior operational, geological and mining
engineering personnel with specific regional nickel laterite experience. The majority of these personnel were
trained by and had successful careers with Inco.
Geology
The geology is a typical tropical lateritic nickel deposit containing both limonite (lower-grade) and saprolite
(higher-grade) mineralised material which has been developed over ultramafic rock units. The area is part of a
larger mineralised province containing several significant lateritic nickel deposits and active mines (see Figure
2).

For personal use only

Historic Work
Since 2008, PT PUL has undertaken various exploration work programs including drilling 85 shallow holes at
200m x 200m spacing as well as various trenching and test pitting programs. Results of this work have allowed
PT PUL to report an initial Exploration Target of 35-45Mt @ 1.2% to 1.6% Ni* in both the limonite and saprolite
zones. Exploration to date has covered less than 50% of the concession, therefore further exploration is
expected to generate significant upside.
As part of its due diligence, the Company has retained PT GMT Indonesia (GMT) a leading Indonesian
geological consulting firm that services clients to international standard, to undertake a comprehensive
technical review of the project and historic exploration data to form a view on a mineralization potential and
provide a detailed exploration program for the project moving forward. The review is expected to be completed
within the next 6-8 weeks.
Development and Production
Topography of the proposed mining area is undulating and considered to provide no significant access issues
for mining machinery. The proposed haul road from the concession to the proposed port area is approximately
3km in length through primarily flat to sloping terrain. The port area is situated on river flats fronting a wide
river approximately 10km from the river mouth to the Gulf of Boni. Loaded barges will transport the nickel ore
for trans-shipment onto mother vessels anchored in the Gulf of Boni.

Figure 3 Location of the eastern part of the Luwu Nickel Project showing the proposed haul road to the port site

* Notes on Exploration Targets

In accordance with Clause 18 of the JORC Code, it is important to note that no JORC Mineral Resources or Ore Reserves have
been established on these concessions and any current assessment remains subject to ongoing exploration work, drilling and
evaluation. The current interpretation remains preliminary and is based on exploration, evaluation and resource definition work
performed by the current owners.

For personal use only

It is expected the nickel laterite material is free-dig and can be easily mined using conventional truck and
shovel open pit mining techniques. No drilling or blasting is required. Topsoil (1 - 5m) can be economically
moved to recoverable topsoil dumps for subsequent use in rehabilitation in both mine and construction areas.
The Company aims to increase the commercial grade DSO nickel laterite product grading through simple
crushing and screening beneficiation, followed by blending.
Preliminary assessment and scoping studies have identified commercial scale mining operations can be
developed for a relatively low capital cost estimated between US$7-8million. Further production expansions
will be assessed and evaluated upon successful commissioning and achieving target capacity. PT PUL aims to
generate an operating margin of approximately US$8-10 per tonne, with further upside possible as production
is increased and economies of scale are realised.
Subject to the timely receipt of the required approvals (for exploitation) it is anticipated the project could move
into production by end Q2 2011 and provide early cash flows that can fund further exploration and/or expand
production.
In addition the Company will look at various strategies of commercializing the lower grade limonite
mineralisation for increased economic returns.
About the DSO Nickel Market
The DSO laterite nickel ore market is a well-established international market, with the bulk of material
predominantly exported from Indonesia, Philippines and New Caledonia and sold to Japan, Europe and China.
The lower grade (<1.8%) material is commonly used as feedstock for blast furnaces to produce nickel pig iron
for sale to domestic stainless steel producers. The higher grade ore (>1.8%) is commonly used for smelting to
ferronickel or matte.
Pricing for lateritic nickel material is a function of nickel price on London Metals Exchange, ore grade,
moisture, iron content, recovery and contained deleterious (penalty) elements.
Yours sincerely

LUKE MARTINO
Company Secretary

Competent Persons Statement

The data in this report that relates to Exploration Results, Resources and Reserves is based on information reviewed and evaluated
by Mr Brett Gunter who is a member of The Australian Institute of Mining and Metallurgy (MAusIMM) and who has sufficient
experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking
to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (the JORC Code). Mr Gunter is a fulltime employee of GMT Indonesia and he consents to
the inclusion in the report of the Exploration Results and/or Mineral Resource and/or Reserve in the form and context in which they
appear.