Resources company Malachite Resources (ASX:MAR) has formed a strategic alliance with Nanyang Mining Resources Investment, a privately owned Chinese-Australian investment group.

Nanyang has established a partnership with Malachite in order to become a significant participant in the Australian mining industry.

Investors liked the news, Malachite shares kicked 13 per cent, or 1.5c, to 13c.

Subject to conditions, Nanyang will become Malachite's largest shareholder through an equity injection in the short term and a joint venture partner in its Conrad Silver Project.

Conrad silver project is located 25km south of Inverell in northern NSW. The Company is evaluating the scope to reopen the old Conrad mine, which has had two previous periods of production but has not operated for over 50 years.

Malachite managing director Garry Lowder said the joint venture partnership was a good outcome for both the company and its shareholders.

"Nanyang has stated its intention of becoming a significant player in the Australian mining industry and has chosen Malachite as the vehicle with which to achieve its aims," Mr Lowder said.

"We are very happy to have formed this alliance and look forward to a long term, mutually beneficial relationship."

Pursuant to the new alliance, Nanyang will subscribe for 15 million fully paid shares in Malachite at a price of $0.0855 each, raising $1,282,500 in new capital.

Nanyang will receive 7.5 million options to purchase additional shares at a price of $0.111 each at any time over the next three years and nominate a suitably qualified and experienced person to become a director of the Company.

Nanyang also wants to become Malachite's joint venture partner at the Conrad project. Broad commercial terms for a joint venture at Conrad have been tentatively agreed between Malachite and Nanyang.

Recent drilling at Conrad by Malachite has intersected narrow high grade, massive sulphide, silver-rich base metal veins, like those mined in the past, and wide zones of lower grade, disseminated and stockwork veined, polymetallic mineralisation.

At current prices, silver represents 50% of total recoverable metal value in the Conrad ore and tin, copper, lead and zinc make up the balance.

Current defined mineral resource at Conrad contains approximately 10Moz of silver, or 19Moz of silver equivalent.

Interestingly, this resource remains open along strike and at depth.

Subject to completion of formal legal documentation and mutual due diligence over the coming weeks, a joint venture between Malachite and Nanyang should soon be established at Conrad.

Drilling at Conrad is expected to resume by early 2010, fully funded by Nanyang and with the objective of taking the project through to feasibility.