Western Mining Co.Ltd(601168) ( Western Mining Co.Ltd(601168) ) announced on February 28 that the company plans to acquire 27% equity of lithium resources company held by the controlling shareholder West Mining Group, actively participate in the development of lithium resources and intervene in the new material industry of lithium battery. The transaction price is 3.343 billion yuan.
Before the official announcement of the news, Western Mining Co.Ltd(601168) ‘s share price had already risen for respect. On February 28, the share price of Western Mining Co.Ltd(601168) rose by 9.32%. On March 1, Western Mining Co.Ltd(601168) continued to rise, with an increase of 6.63% at the close of the day.
On the evening of March 1, Western Mining Co.Ltd(601168) announced that the company had received the inquiry letter issued by the Shanghai Stock Exchange, requiring it to check whether the insider registration and insider information control system were sound, and whether the relevant provisions on insider information control were strictly implemented in the whole process of transaction planning and disclosure.
why transfer the controlling shareholder’s equity of lithium resources company at a high premium
According to Western Mining Co.Ltd(601168) announcement, on May 20, 2015, lithium resources company was established and registered. The controlling shareholder of the company, West Mining Group, subscribed 162 million yuan, accounting for 27%. After the completion of this equity transfer, xikuang group will no longer hold the lithium resources company, and Western Mining Co.Ltd(601168) will hold 27% equity of the lithium resources company, becoming the second largest shareholder of the lithium resources company.
Western Mining Co.Ltd(601168) said that the industry of new energy vehicles and new materials for lithium batteries is in a stage of rapid development, and there is huge room for development in the future. The price of battery grade lithium carbonate rose from a low of less than 40000 yuan / ton in 2020 to about 468000 yuan / ton on February 28, 2022. With the gradual release of production capacity of lithium resources company, its operating performance has rapidly entered the explosive period. This investment will bring long-term profit contribution to the company and become an important profit growth point of the company.
In addition, this investment will promote the upgrading of Western Mining Co.Ltd(601168) industrial structure, optimize the company’s industrial structure and product structure, improve the company’s market anti risk ability, prevent the risk of periodic fluctuation of mineral product price, improve the industrial technology content, and constantly transform to high-tech mining enterprises and scientific and technological mining companies.
In the inquiry letter, the Shanghai Stock Exchange Requested Western Mining Co.Ltd(601168) supplementary disclosure of the transaction background and main considerations of the acquisition of the participation right of lithium resources company from the controlling shareholder at a high premium; Combined with the composition of the board of directors and the operation decision-making mechanism of lithium resources company, this paper explains how to realize the business coordination between the company and lithium resources company and promote the development of the company after undertaking the above equity participation of western group; In combination with the market price fluctuation of the main products of lithium resources company since 2015, quantitatively explain the reasons and rationality of the high premium of the underlying asset valuation.
whether the main customers of lithium resources company are stable
Western Mining Co.Ltd(601168) announcement shows that the lithium resources company is currently mainly engaged in the development of lithium resources in East Taijinar Salt Lake and the processing and production of lithium carbonate products. The lithium boron potassium comprehensive development project of lithium resources company was approved and put on record in Qinghai Provincial Economic and Information Technology Commission in July 2016, with a total investment of 3.286 billion yuan. The construction scale and content include production units and supporting projects with an annual output of 30000 tons of lithium carbonate, 300000 tons of potassium fertilizer (potassium sulfate) and 30000 tons of boric acid. From January to November 2021, lithium resources company has produced 9510 tons of battery grade lithium carbonate products.
At present, lithium resources company and its holding subsidiary Qinghai lithium industry have operated a production line with an annual output of 20000 tons of lithium carbonate, and its annual output of 30000 tons of lithium carbonate has been filed with relevant government departments, and its supporting facilities are complete. Lithium resources company can build and increase the production line with an annual output of 10000 tons of lithium carbonate within one year. At that time, the lithium resources company will form an annual production capacity of 30000 tons of lithium carbonate, which will rank among the top in China’s lithium carbonate production enterprises.
The Shanghai stock exchange requires Western Mining Co.Ltd(601168) settle the technical development of the contract industry and the situation of comparable companies, and quantitatively explain the development and application of core technologies of lithium resources company; The specific development progress, expected completion time limit and the amount to be invested of the lithium boron potassium comprehensive development project; The main customers of lithium resources company, whether they are related and stable.
It is worth noting that Western Mining Co.Ltd(601168) the transaction consideration for the transfer of 27% equity of lithium resources company is determined based on the assessed value of lithium resources company. The appraisal adopts the asset-based method and the market method, and finally selects the appraisal result adopting the asset-based method. In this appraisal, the total equity value of the target assets is 12.38 billion yuan, and the appraisal appreciation rate is 954.07%.
In addition, the consideration of this transaction is RMB 3.343 billion, and 80% will be paid to west mining group within 5 trading days after the signing of this transaction contract, and the remaining 20% will be paid in one time within 5 working days from the date of completing the industrial and commercial change registration of the subject equity of the target company.
In view of this, the Shanghai stock exchange requests Western Mining Co.Ltd(601168) to supplement whether the counterparty provides the profit guarantee, compensation commitment or repurchase commitment of the transaction subject within a certain period of time. If not, please explain the specific reasons, whether relevant safeguard measures are taken, and whether it is conducive to protecting the interests of listed companies and the legitimate rights and interests of minority shareholders Western Mining Co.Ltd(601168) it is necessary to supplement the asset-based method to evaluate the asset items with high value-added and the specific reasons, and explain the rationality of the valuation; The specific capital sources of this acquisition, including but not limited to the payment proportion and amount of self owned funds and bank loans, bank loan interest rate and repayment term, etc; At the same time, Western Mining Co.Ltd(601168) should also explain the impact of payment arrangement on the company’s financial expenses, asset liability ratio and daily regular liquidity in combination with the deposit and restriction of monetary funds.
