Securities code: 600392 securities abbreviation: Shenghe Resources Holding Co.Ltd(600392) Announcement No.: pro 2022-013 Shenghe Resources Holding Co.Ltd(600392)
About holding company Shenghe Resources Holding Co.Ltd(600392) (Singapore) Limited
Announcement of proposed acquisition of equity of peak rare earths Limited
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents. Important content tips:
In order to further consolidate the development foundation of the company, The holding company Shenghe Resources Holding Co.Ltd(600392) (Singapore) Co., Ltd. (hereinafter referred to as "Shenghe Singapore") plans to acquire 19.9% of the equity of peak rare earths Limited (hereinafter referred to as "peak company") listed on the Australian Stock Exchange (hereinafter referred to as "ASX") held by Appian Pinnacle HoldCo Limited (hereinafter referred to as "Appian company").
The agreement stipulates that Shenghe Singapore will purchase 39644620 ordinary shares of peak company held by Appian company at the price of a $0.99/share, accounting for about 19.9% of the total issued shares of peak company. The total purchase amount is about a $39248173.80, equivalent to about 178.905 million yuan.
The acquisition of 19.9% equity of peak company does not constitute a connected transaction, nor does it constitute a major asset reorganization specified in the administrative measures for major asset reorganization of listed companies.
1、 Transaction overview
On February 11, 2022, the company held the 22nd Meeting of the 7th board of directors, deliberated and approved the proposal on the proposed acquisition of the equity of peak rare earths limited by the holding company Shenghe Resources Holding Co.Ltd(600392) (Singapore) Co., Ltd., and the voting results were 12 in favor, 0 against and 0 abstention.
Through the holding company Shenghe Singapore, which is 100% owned by the wholly-owned subsidiary Leshan Shenghe rare earth Co., Ltd., the company plans to sign a letter of agreement with Appian company, which stipulates that Shenghe Singapore will purchase 39644620 ordinary shares of peak company held by Appian company at a price of $0.99/share, It accounts for about 10000 yuan of issued shares of peak company.
The acquisition of 19.9% equity of peak company does not constitute a connected transaction, nor does it constitute a major asset reorganization specified in the administrative measures for major asset reorganization of listed companies. According to the articles of association and relevant laws and regulations, the acquisition of 19.9% equity of peak company does not need to be submitted to the general meeting of shareholders for deliberation. 2、 Counterparty information
Appian company, founded in September 2014, is a private equity fund registered in the Jersey Channel Islands, specializing in the metal and mining industry, with company registration number 116664. Appian currently holds 43587838 ordinary shares of peak, accounting for 21.88%.
3、 Basic information of transaction object
According to the announcement of peak company, bank level feasibility study report and public information:
(I) basic information
Peak is an Australian listed company headquartered in Perth, Western Australia and listed on the Australian Stock Exchange (Code: PEK). It is mainly engaged in ngualla rare earth mine project in Tanzania and Teesside refinery project to be invested and constructed in the UK.
(II) shareholders
As of February 2, 2022, peak company has issued 199219200 ordinary shares, and the shareholding of its main shareholders is shown in the table below:
Name number of shares proportion of shares
Appian Pinnacle HoldCo Limited 43,587,838 21.88%
Note: except Appian company, peak company has no other shareholders holding more than 5%.
(III) business conditions and main assets
1. Rare earth ore project
The core asset of peak company is the ngualla rare earth mine project owned by its wholly-owned subsidiary PR ngminerals Ltd (hereinafter referred to as "PR ng") in Tanzania. Ngualla rare earth mine project is located in southern Tanzania, covering an area of 18.14km2. According to JORC (2012) standard, taking 1% as the cut-off grade, the ore resource is 214 million tons, with an average grade of 2.15%, equivalent to 4.61 million tons of REO. Rare earth reserves are 18.5 million tons, with an average grade of 4.8%, equivalent to 887000 tons of REO. Praseodymium neodymium oxide accounts for about 21.26% of rare earth oxides. Currently, special mining license (SML) is being applied for.
In July 2021, PR NG's application for special mining license (SML) was approved by the cabinet of the Tanzanian government and has yet to be officially granted by the Minister of mines. In the case of a joint venture company established by Tanzania's government and jointly owned by Tanzania's minister of mining, peak promises to transfer 84% of the equity of the company to smng (a joint venture company jointly owned by Tanzania's Government); The government of Tanzania holds 16% of the shares. According to Tanzanian law, the Tanzanian government's equity in the joint venture will exist in the form of undiluted free equity shares.
Next, peak needs to negotiate and sign an economic framework agreement and an inter shareholder agreement with the Tanzanian government.
Ngualla rare earth mine project is expected to invest about US $200 million, process about 800000 tons of raw ore and produce about 37200 tons of rare earth concentrate (45% REO).
2. Rare earth refining project
Peak plans to build a rare earth refinery at Wilton international base near Middlesbrough town in Tees Valley, UK, with an annual output of 9900 to 11600 tons of various rare earth products. The construction and development expenditure of the project is expected to be about US $165 million.
Peak company has obtained the lease right of 19 hectares of project land for 250 years, and has obtained the environmental permit and planning permit for project construction.
(IV) financial situation
According to peak's 2021 annual report, as of June 30, 2021, peak's financial situation is as follows:
Unit: aud
Subject: June 30, 2021 June 30, 2020
1、 Total assets 61586521 62380904
2、 Total liabilities 6291842 6512547
3、 Owner's equity 55294679 55868357
Subject year 2021 year 2020
4、 Operating income 111008 12374452
5、 Net profit - 4770848 7652714
4、 Evaluation of transaction object
Beijing Tianjian Xingye Assets Appraisal Co., Ltd., which is qualified to engage in Securities and futures business, issued the value consultation report (Tianxing Zi (2022) No. 0015). According to the sensitivity analysis of the comprehensive market method and income method of peak's enterprise value on the valuation benchmark date of June 30, 2021, the value range of peak is $185-233 million, The equivalent price per share is $1.1365-1.4303.
5、 Main contents of the letter of agreement
(I) agreement subject
Buyer: Shenghe Resources Holding Co.Ltd(600392) (Singapore) Co., Ltd
Seller: Appian pinnacle HoldCo Limited
(II) main contents
1. Appian company and Shenghe Singapore agreed that Appian company would sell 39644620 ordinary shares of peak company held by Appian company to Shenghe Singapore, accounting for about 19.9% of the issued ordinary shares of peak company;
2. The selling price per share is $0.99, totaling $39248173.80;
3. The delivery shall be started on the next working day after the signing of the agreement letter.
6、 Impact of this transaction on Listed Companies
Shenghe Resources Holding Co.Ltd(600392) adhere to the rare earth business as the core, adhere to China's two foreign resources and two markets, and maintain the stable supply of the global rare earth industry chain as the business purpose. If the project can be successfully implemented, it will help to further consolidate the development foundation of the company and optimize the global business layout of the company.
7、 Risk analysis of foreign investment
(I) risk of formal approval of SML
In July 2021, the Tanzanian cabinet approved the SML application of peak company, but the Minister of mining has not officially issued the SML. Peak company also needs to negotiate the economic framework agreement and inter shareholder agreement with the Tanzanian government. As peak has not yet reached an agreement with the Tanzanian government on the economic framework agreement and the agreement between shareholders, the project risks not being successfully awarded to SML.
(II) review risk of this transaction
According to the opinions issued by the legal service institution, this transaction does not belong to the transaction matters that are forcibly declared to the relevant government agencies before the transaction, but it does not exclude the risk that the relevant governments involved in this transaction will review this transaction according to the requirements of discretion in terms of foreign investment security review and fair competition.
(III) price fluctuation risk of rare earth products
In recent years, the price fluctuates greatly. The price fluctuation of rare earth products will directly affect the stock price fluctuation of peak company and the income after the project is put into operation.
(IV) risk of changes in laws and regulations
The project is an overseas investment project. If there are changes in the relevant laws and regulations of the host country that are not conducive to the project in the future, the implementation and income of the project may be affected.
It is hereby announced.
Shenghe Resources Holding Co.Ltd(600392) board of directors February 12, 2022
Filing document: letter of agreement
Resolution of the board of directors
