A local Chinese government agency in eastern China plans to take a controlling 51% stake in Australia 's Northern Uranium Ltd. (NTU.AX) for A$15.7 million, according to a deal disclosed by the Australian uranium explorer Monday.

Northern Uranium signed a binding letter of intent with Chinese mineral explorer Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co., a unit of the East China Mineral Exploration and Development Bureau, or ECE, which is a mining agency owned by the Jiangsu provincial government.

Government-backed agencies in China , banned from operating as corporations, usually set up investment units as a counter-party in transactions.

The investment will make the Chinese investor a cornerstone shareholder in the Australian explorer and highlights the hunt to secure resources abroad by China Inc.

Officials from ECE and Jiangsu Eastern China Non-Ferrous were not available for comment Tuesday.

The deal still needs shareholder and regulatory approval, among other requirements, according to the joint statement by both companies that was issued by Northern Uranium.

ECE will acquire 108 million Northern Uranium shares at A$14.5 per share, the statement said.

It said the funds raised will be applied to accelerate exploration of Northern Uranium's uranium and heavy rare earth element prospects in Western Australia and the Northern Territory .

Chinese newspaper 21st Century Business Herald reported Tuesday that ECE may team up with other Chinese state-controlled firms like China National Nuclear Corp. or China Guangdong Nuclear Power Group to jointly develop the uranium assets once reserves are proven, citing ECE head Shao Yi.
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