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HONG KONG, Mar 22, 2010 - (ACN Newswire) - FinTronics Holdings Company Limited ("FinTronics" or the "Company", together with its subsidiaries, the "Group")(SEHK Stock Code: 706) is pleased to announce that it proposes to acquire the controlling interest in certain gold mines in Russia. Through FinTronics' wholly owned subsidiary, Maxing Investment Limited, the Group has entered into a conditional Sale and Purchase Agreement with Truffle Rich Holdings Limited, whereby it will acquire the entire issued share capital of Spring Vast Limited, an investment holding company that will own 80% interest in CSJC Gold Mining Company Omchak ("Omchak") for an aggregate consideration of US$300 million (the "Acquisition").
Gold Mine Operations
Omchak and its subsidiaries are engaged in the business of geological exploration and commercial mining of placer gold deposits and hard rock gold deposits located in Russia. As at the date of this announcement, Omchak owns eight gold projects in Russia. The projects are located in eastern Russia and include three producing alluvial gold mining operations, a proposed underground gold mine which is at a feasibility study stage, and four gold exploration projects (the "Omchak Project"). Based on the latest available technical data, the Omchak Project contains an aggregate gold reserve of 1,193,000 ounces. These gold reserves are categorized under the Russian Resource Reporting Code as C1 and C2 reserves. In addition, upside from significant gold resources exist, which are categorized under the Russian Resource Reporting Code as P1, P2 and P3 resources and contain an aggregate gold resources of 6,232,000 ounces.
The three operating mines that are currently producing gold are Berelekh, Zeyazoloto and Uduma. Berelekh is the largest of Omchak's mines, located in the Magadan Region of northeast Russia. Current operations at Berelekh are based on 36 gold mining licenses and are located along the Berelekh River valley and tributaries over a distance of 65km. The mine produces around 50,000 ounces of gold per annum.
Uduma is a small mine located in the Ojmiakon District of the Republic of Sakha (Yakutia) in Russia. The mine produces around 2,000 ounces of gold per annum.
The Zeyazoloto gold mine is a small scale alluvial gold operation located in the Amur region of Russia, close to the border with China. Mine production during the period 2006 to 2008 averaged 2,600 ounces of gold per annum.
Opportunities to FinTronics
The Acquisition is a transformational transaction for FinTronics to diversify into the gold mining business and the natural resources sector with high future growth potential. This is in line with the Group's corporate strategy of enhancing the sustainable future growth and profitability, as well as maximizing shareholders value.
Commenting on the Acquisition, Mr. Keith Chan, Chief Financial Officer of FinTronics, said, "Skyrocketing demand for gold has been propelling the price of gold bullion to record heights last year. We are positive about the long term prospects in the gold market and this Acquisition positions FinTronics to participate in the booming natural resources sector expanding our profitability base and creating greater long term returns for our shareholders."
Upon completion of the transaction, the natural resources sector will become one of the core business segments of the Group. The Group would intensify its focus on the natural resources sector going forward, such as investing in other gold mines globally, including but not limited to those located in Russia and the People's Republic of China. The Group will retain and currently has no intention to divest its existing businesses.
Details on the acquisition consideration
The US$300 million consideration for the Acquisition is equivalent to approximately HK$2,328 million. It will be satisfied by means of: 1) cash payment; 2) issuance of ordinary shares at HK$0.50 per share; and 3) issuance of unlisted preferred shares at HK$0.50 per share. Such consideration was determined after arm's length commercial negotiations between the Purchaser and the Vendor with reference to relevant factors. Under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the transaction constitutes a Very Substantial Acquisition and a Connected Transaction for the Company. Therefore, the Acquisition is subject to the approval of independent shareholders of the Company.
Credit Suisse is acting as exclusive financial advisor to FinTronics.
Contact:
Keith Chan,
FinTronics
Chief Financial Officer
Tel: +852 2234 9723
Fax: +852 2234 9738
Email: keith@fintronics.com.hk
Strategic Financial Relations Limited
Iris Lee / Brenda Chan / Angela Ng
Tel: +852 2864 4829 / 852 2864 4833 / 852 2864 4855
Fax: +852 2527 1196
Email: iris.lee@sprg.com.hk / brenda.chan@sprg.com.hk / angela.ng@sprg.com.hk
Topic: Merger & Acquisition
Source: FinTronics Holdings
Sectors: Metals & Mining, Daily Finance
https://www.acnnewswire.com
From the Asia Corporate News Network
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