Fund-raising 700 million yuan to purchase lead-zinc mine western resources and add Qixia Mountain deposit again

Western Resources intends to acquire 80% of the shares of the third-party Yinmao Mining through a private placement of additional controlling shareholders. However, the remaining reasonable service period for this lead-zinc mine is only 10.4 years.

Western Resources released a related announcement today. It is reported that Western Resources intends to non-publicly issue no more than 32.258 million A shares to no more than 10 specific objects, including Sichuan Hengkang, a controlling shareholder, at a total of RMB 21.7 per share. The total amount of funds raised shall not exceed RMB 700 million for acquisitions. An 80% equity interest in Yinmao Mining was transferred by a third party, Jiangsu Yinmao Holdings (Group) Co., Ltd.

The pre-assessment value of net assets of Yinmao Mining is approximately RMB 840 million, and the corresponding value of 80% equity of Yinmao Mining is RMB 672 million. Western Resources will use 672 million yuan in cash as a transfer price.

According to estimates, 80% of Yinmao Mining’s shares are valued in two parts, one of which is mining rights, with an estimated value of 598 million yuan. Yinmao Mining owns the mining rights of the Qixiashan lead-zinc mine in Nanjing. The total amount of mine ore is 12.260 million tons, of which the amount of lead-zinc ore is 6.04 million tons, the production scale is 350,000 tons/year, and the mining area is 0.9808 square kilometers. It is estimated that The recoverable reserves are 3.47 million tons; the other part is the assessment of the value of enterprises other than mining rights. The net assets of the mining company are 24,263,400 yuan, and the pre-assessed value-added, 3.15 million yuan, with an appreciation ratio of 1.32%.

Western Resources said that the company will add lead, zinc non-ferrous metal products business income on the basis of the original copper, lithium non-ferrous metal products. After the completion of the issuance, the company's main business remains unchanged. In the short term, the company does not have plans for major integration of existing businesses and assets.

Yinmao Holding committed that the net profit after tax of the three fiscal years of Yinmao Mining in 2010, 2011 and 2012 were 103.6 million yuan, 124.35 million yuan and 13.960 million yuan, respectively. If Yinmao Mining's actual after-tax net profit per year is lower than the above-mentioned commitment, Yinmao Holdings will make up for the difference in cash to Yinmao Mining.

The original main business of Western Resources was the construction of local infrastructure facilities. In December 2008, after the company acquired the equity of Gansu Yangba Copper, it transformed into an investment company focusing on the exploitation of mineral resources. In February 2010, the company acquired the equity of Quzhou Jingtai Lithium Industry and the mining rights and other operating assets of the Ningbo Mining Group and Lithium Mining Industry Co., Ltd. The company expanded from a single copper mining operation to the selection of spodumene ore.

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