add another member to the overseas mining group.
On December 22, Zhejiang Huayou Cobalt Co.Ltd(603799) announced that it planned to acquire the equity of Zimbabwe lithium mining company.
On December 23, Zhejiang Huayou Cobalt Co.Ltd(603799) opened up more than 4% and fell during the session. Finally, it closed up 0.94% to 112.25 yuan / share, with a total market value of 137.083 billion yuan.
the subject matter is still in the loss period
According to the announcement, Zhejiang Huayou Cobalt Co.Ltd(603799) plans to acquire 87% equity of Zimbabwe prospect lithium mining company held by Singapore pmpl and related creditor’s rights under the inter company loan agreement through its subsidiary Huayou international mining for us $378 million. At the same time, Zhejiang Huayou Cobalt Co.Ltd(603799) also plans to acquire 6% equity of prospect lithium mining company held by natural person Kingston kajese and 7% equity of prospect lithium mining company held by tamari trust family trust through Huayou international mining for us $44.2477 million.
The total amount of this transaction is US $422 million. After the acquisition, Huayou international mining will hold 100% equity of prospect lithium mining company and related creditor’s rights under the inter company loan agreement.
The reporter noted that the acquisition target of Huayou is still in a state of loss. As of June 30, 2021, the total assets of prospect lithium mining company are USD 1.968 million and the net assets are USD -918 million; In fiscal year 2021, the revenue was USD 18000 and the net loss was USD 872000.
Why buy a loss making company? Huayou is actually interested in the former’s mines in Africa. The main asset of prospect lithium mine is the Arcadia lithium mine project in Zimbabwe, which is located in mashonalan District in the east of Zimbabwe, about 38 kilometers away from the capital Harare.
As of October 2021, the standard resource quantity of Arcadia project announced by prospect company is 72.7 million tons, with lithium oxide grade of 1.06%, tantalum pentoxide grade of 121ppm, lithium oxide metal quantity of 770000 tons (lithium carbonate equivalent of 1.9 million tons) and tantalum pentoxide metal quantity of 8800 tons. Among them, the reserves are 42.3 million tons, the grade of lithium oxide is 1.19%, the grade of tantalum pentoxide is 121ppm, the amount of lithium oxide metal is 504000 tons (1.24 million tons of lithium carbonate equivalent), and the amount of tantalum pentoxide metal is 5126 tons.
According to the feasibility study report released in December, the construction period of Arcadia project is 2 years, the production life is 18 years, open-pit mining, the stripping ratio within the mine service life is 3.4 tons / ton, and the annual output is 147000 tons of spodumene concentrate, 94000 tons of technical lithium permeable feldspar concentrate, 24000 tons of chemical lithium permeable feldspar concentrate and 0.3 tons of tantalum concentrate. Zhejiang Huayou Cobalt Co.Ltd(603799) disclosed that the after tax net present value of the Arcadia project is US $929 million
It is worth mentioning that prospect began small-scale open mining of Arcadia project at the end of 2020, operated a small-scale lithium permeable feldspar pilot production line on site, and completed the shipment and sales of the first batch of products in October.
Zhejiang Huayou Cobalt Co.Ltd(603799) said that this transaction is in line with the company’s development idea of “controlling resources, expanding the market and raising capacity in the middle”. Arcadia project helps the company to strengthen the layout of upstream lithium resources, enhance the resource reserves required for lithium battery new energy materials, and form a strong resource guarantee for the company’s middle and downstream industrial chain.
transition to lithium battery integration
Tianyancha app shows that Zhejiang Huayou Cobalt Co.Ltd(603799) was established in 2002 and landed on the main board of Shanghai Stock Exchange in January 2015. It is a high-tech enterprise focusing on cobalt, copper non-ferrous metal smelting and deep processing of new cobalt material products. The company’s cobalt products are mainly used in new energy ternary power batteries and consumer electronics.
At present, Zhejiang Huayou Cobalt Co.Ltd(603799) is transforming from copper and cobalt enterprises to vertical integration of lithium battery materials, and successively layout the industrial chain.
On November 7, Zhejiang Huayou Cobalt Co.Ltd(603799) said that the company and Hubei Xingfa Chemicals Group Co.Ltd(600141) signed the cooperation framework agreement in Yichang City, Hubei Province. The two sides will cooperate around the whole industrial chain of new energy lithium battery materials and jointly invest in the integrated industry of phosphate rock mining and beneficiation, phosphating, wet process phosphoric acid, iron phosphate and lithium iron phosphate materials in Yichang, Hubei Province according to the principle of one-time planning and step-by-step implementation, Build 500000 T / a iron phosphate, 500000 T / a lithium iron phosphate and related supporting projects.
In addition, according to the announcement on June 11, Zhejiang Huayou Cobalt Co.Ltd(603799) said that it planned to raise no more than 7.6 billion yuan through the public issuance of A-share convertible corporate bonds to build an annual output of 50000 tons of high nickel cathode material, 100000 tons of ternary precursor material integration project in Guangxi and 50000 tons of high-performance ternary precursor project in Quzhou, and supplement working capital. The construction subject of the first two projects is its wholly-owned subsidiary BAMO technology. Just a month ago, Zhejiang Huayou Cobalt Co.Ltd(603799) restarted the acquisition of BAMO technology.
According to the announcement on May 23, the company plans to acquire 38.62% equity of BAMO technology at a price of 1.351 billion yuan. After the completion of the transaction, the company will become the controlling shareholder of BAMO technology, controlling 65.02% of the voting rights of the latter in total. BAMO technology is mainly engaged in the production and sales of cathode materials for lithium batteries. Its main products are lithium cobaltate and ternary materials (including high nickel). It is also an important customer of Zhejiang Huayou Cobalt Co.Ltd(603799) .
unstable performance growth
Thanks to the simultaneous rise in product volume and price, in the first three quarters, Zhejiang Huayou Cobalt Co.Ltd(603799) achieved a revenue of 22.8 billion, a year-on-year increase of 53.6%, and a net profit attributable to the parent company of 2.37 billion, a year-on-year increase of 245%.
However, from a longer time line, Huayou’s performance growth is not stable. According to the annual report data, in 2010 and 2011, its net profit increased positively for two consecutive years, and then decreased successively in the next two years. After a slight increase of 18.5% in 2014, it plummeted by nearly 270% in 2015. It ushered in a sharp rise in 2016 and 2017, fell again by 19.41% and 92.18% in the next two years, and increased by 874.9% in 2020.
In addition, the debt pressure of Zhejiang Huayou Cobalt Co.Ltd(603799) can not be ignored. From 2013 to 2020 and the first three quarters of 2021, its asset liability ratio has been maintained at more than 53%, and the latest period is 54.32%. Specifically, notes and debts payable amounted to $8.846 billion and interest bearing liabilities amounted to $9.896 billion.
It should be noted that as of December 10, Zhejiang Huayou Cobalt Co.Ltd(603799) controlling shareholder Zhejiang Huayou Holding Group Co., Ltd. and actual controller Chen Xuehua held 285 million shares of the company, accounting for 23.33% of the total share capital of the company; Among them, 183 million shares have been pledged, accounting for 64.21% of its shares and 14.98% of the total share capital.
The former second largest shareholder of Huayou also completed the liquidation not long ago. According to the announcement on August 25, Zhejiang Huayou Cobalt Co.Ltd(603799) Dashan company, the former second shareholder, reduced about 12.0843 million shares of the company from August 23 to 25, accounting for 0.99% of the total share capital of the company. After the reduction, Dashan company no longer holds the company’s shares. Based on the closing price of 134.31 yuan / share on that day, Dashan company can cash out more than 1.6 billion yuan.
(International Finance News)
