China Shen Zhou (SHZ) Unit to Acquire 60% of Wuchuan Mining
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China Shen Zhou Mining & Resources, Inc. (AMEX: SHZ),reports its subsidiary, Xiangzhen Mining Ltd. ("Xiangzhen"), located in Inner Mongolia, has signed an equity transfer and investment increase agreement with the shareholders of Wuchuan Dongsheng Mining Company Ltd. ("Wuchuan Mining"), based in Zunyi city, Guizhou Province, whereby Xiangzhen will acquire 60% ownership of Wuchuan Mining's equity.
According to the terms of the agreement, Xiangzhen will use 2,418,448 of China Shen Zhou's common shares, which is equivalent to RMB 43 million (approximately US$6.8 million, assuming a price of US$2.80 per share and an exchange rate of US$1= RMB 6.35) and will pay RMB 50 million (approximately US$7.92 million) in cash, of which, RMB 1 million would be added into registered capital and the remaining RMB 49 million (approximately US$7.76 million) would be cash on the account as capital reserves, to acquire a 60% ownership stake in Wuchuan Mining's equity, leaving the two original owners holding a 40% stake in Wuchuan Mining's equity. Both parties have agreed that upon completion of the equity transfer, they will integrate their resources and work together to develop the assets owned by Wuchuan Mining, including the five mines, two flotation plants and the fluoride company.
The Shuanghe mine's reserves of fluorite and barite are estimated to be 400,000 metric tons and 200,000 metric tons, respectively. The Qingshuzi mine's reserves of fluorite and barite are estimated to be 300,000 metric tons each. The aggregate of all the other three mines' reserves of fluorite and barite are estimated to be 300,000 metric tons. The annual ore processing capacity of the fluorite floatation plant in Duru town is estimated to be 60,000 metric tons. The annual ore processing capacity and design capacity of the fluorite floatation plant in Fengshui town are estimated to be 150,000 metric tons and 200,000 metric tons, respectively.
Based on Wuchuan Mining's historical performance, China Shen Zhou's management forecasts production for Wuchuan Mining to be 2,000 metric tons of fluorite lump, 40,000 metric tons of fluorite powder, and 26,000 metric tons of barite powder, with revenues of US$15 million, and net profit of US$4.5 million for the 2012 fiscal year.
According to the terms of the agreement, Xiangzhen will use 2,418,448 of China Shen Zhou's common shares, which is equivalent to RMB 43 million (approximately US$6.8 million, assuming a price of US$2.80 per share and an exchange rate of US$1= RMB 6.35) and will pay RMB 50 million (approximately US$7.92 million) in cash, of which, RMB 1 million would be added into registered capital and the remaining RMB 49 million (approximately US$7.76 million) would be cash on the account as capital reserves, to acquire a 60% ownership stake in Wuchuan Mining's equity, leaving the two original owners holding a 40% stake in Wuchuan Mining's equity. Both parties have agreed that upon completion of the equity transfer, they will integrate their resources and work together to develop the assets owned by Wuchuan Mining, including the five mines, two flotation plants and the fluoride company.
The Shuanghe mine's reserves of fluorite and barite are estimated to be 400,000 metric tons and 200,000 metric tons, respectively. The Qingshuzi mine's reserves of fluorite and barite are estimated to be 300,000 metric tons each. The aggregate of all the other three mines' reserves of fluorite and barite are estimated to be 300,000 metric tons. The annual ore processing capacity of the fluorite floatation plant in Duru town is estimated to be 60,000 metric tons. The annual ore processing capacity and design capacity of the fluorite floatation plant in Fengshui town are estimated to be 150,000 metric tons and 200,000 metric tons, respectively.
Based on Wuchuan Mining's historical performance, China Shen Zhou's management forecasts production for Wuchuan Mining to be 2,000 metric tons of fluorite lump, 40,000 metric tons of fluorite powder, and 26,000 metric tons of barite powder, with revenues of US$15 million, and net profit of US$4.5 million for the 2012 fiscal year.
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