Prosperity Minerals Holdings Ltd Proposed disposal and update on trading activities (2375X)

TIDMPMHL

RNS Number : 2375X

Prosperity Minerals Holdings Ltd

06 February 2013

6 February 2013

Prosperity Minerals Holdings Limited

("Prosperity" or "the Company")

Proposed disposal of interest in cement manufacturer

Update on other trading activities

Prosperity Minerals Holdings Limited (PMHL.L), an iron ore trading business serving the People's Republic of China ('PRC'), a real estate owner/developer in the same market and an investor in two PRC cement manufacturers, is pleased to announce that it has conditionally agreed to dispose of its interest in TCC Liaoning Cement Company Limited ('TCC Liaoning'). In addition, the Company is providing an update on other trading activities.

Proposed disposal of interest in TCC Liaoning

On 6 February 2013, Prosperity signed a conditional sale and purchase agreement with TCC International Holdings Limited ('TCC International') to sell its 16.11% interest in TCC Liaoning for RMB 144.5 million (approximately US$ 23 million) ('the Disposal') including a provision for PRC capital gains tax.

Completion of the Disposal is subject to TCC International obtaining the necessary approvals from the Taiwan Investment Commission and its compliance with the listing requirements in Taiwan and Hong Kong. The consideration will be received in two stage payments with a 5 per cent retention provision. The first stage payment of RMB 115.6 million (representing 80 per cent of the consideration) is receivable upon receipt of the approval document from the Foreign Trade and Economic Cooperation Bureau in the PRC, which is anticipated to take several months. The Company will provide an update on timing in the next results announcement. The second stage payment of RMB 21.7 million (representing 15 per cent of the consideration) is receivable upon completion of the registration of transfer through the PRC Industry and Commerce Administration Bureau. The balance of the consideration of RMB 7.2 million (or 5 per cent) will be retained by TCC International as provision for PRC capital gains tax for one year from Completion.

Prosperity acquired its interest in TCC Liaoning in September 2010 for a consideration of RMB 100 million and its disposal will generate a profit before tax of RMB 44.5 million (approximately US$ 7.1 million). The proceeds will bolster the Company's cash balances and afford continued flexibility in investing in its core businesses. This disposal is a further example of the Company's ability to generate good returns on its investments.

Update on other Trading Activities

Extension of the Blackrock Metals Inc. Off-take Agreement

Further to the Company's announcement on 21 August 2012, Prosperity and Blackrock Metals Inc. ('Blackrock') signed a Supplementary Agreement on 6 February 2013 in which the first shipment date for iron ore under the Blackrock Off-take Agreement was extended from no later than the end of 2012 (or another date as mutually agreed by both parties), to no later than June 2015. In addition, Prosperity was awarded an extra 800,000 tonnes of iron ore to be added, at the same discount to the prevailing market price, to the 4 million tonnes in the original Blackrock Off-take Agreement at no extra cost.

As part of the original Blackrock Off-take Agreement, Prosperity provided a deposit of US$ 40 million, which was funded by the Industrial and Commercial Bank of China and it has extended the deposit loan in order for the repayment schedule to meet with the amended shipment schedule of Blackrock.

The Directors remain positive about the Blackrock project.

Reduction of the Century Prepayment

Further to the announcements on 28 September 2012 and 22 October 2012 regarding the Company's strategy of reducing its deposits with certain mining operators, the Company received a further US$ 4 million from Century Iron Mines on 4 December 2012. Following this payment, the Company's prepayment with Century Iron Mines has been reduced to zero, otherwise, the terms of the Century Off-take Agreement remain unchanged.

Hangzhou City property development project, Zhejiang Province

The Directors are pleased to announce that on 3 January 2013, Prosperity signed an agreement with its joint venture partner which will allow the Company to increase its shareholding in the Hangzhou development project to 60 per cent for RMB 40 million (approximately US$ 6.4 million). The additional 10 per cent will be acquired from the joint venture partner on the same terms as the original investment, subject to all relevant PRC governmental approvals being obtained. Assuming majority control enables Prosperity to take the lead in the development.

 
 Prosperity Minerals Holdings Limited 
  Patrick Li 
  Neelke Kruger-Logan                           [phone] 
 Citigate Dewe Rogerson 
  Martin Jackson                                [phone] 
  Priscilla Garcia                               9571 
 Daniel Stewart & Company plc 
  Corporate Finance: Paul Shackleton, Antony 
  Legge, Emma Earl                              [phone] 
  Corporate Broking: Martin Lampshire            6550 
 

Notes to Editors:

Prosperity (AIM: PMHL) is:

- an iron ore trading business serving the PRC;

- a specialised real estate owner and developer in the same market; and

- an investor in two cement plants, also in the PRC.

Prosperity's iron ore trading business has been operating since 1992 and sources iron ore, for shipment and use in the PRC, from major international iron ore producers in South Africa, Brazil, Australia and South East Asia, Thailand and Malaysia in particular. The majority of the Company's iron ore is sold to large steel manufacturers in the PRC. In the fiscal years ended 31 March 2011 and 2012, Prosperity shipped 6.3 million tonnes and 4.8 million tonnes of iron ore respectively. In December 2010, Prosperity acquired a 35% effective interest in United Goalink Limited (UGL), a Brazilian mining operation which owns approximately 600 square kilometres of exploration rights and 3 square kilometres of mining concession in the State of Ceara. In the year ended 31 March 2012, UGL shipped 218,808 tonnes of iron ore.

Prosperity has operated a real estate investment and development division since February 2010 which is focused on creating a portfolio of PRC property and development assets with good upside potential and manageable risk. The Company has entered into a number of agreements with its partners to develop recreational, commercial and residential projects in Guangzhou City and Changzhou City in the southern PRC and Hangzhou City in the east. Prosperity also acquired interests in an existing commercial building in Guangzhou, which is a regional capital and is located in the Pearl River Delta, the foremost economic zone in the southern PRC.

Prosperity has two investment associates in the cement manufacturing industry in the PRC. The Company holds a 33.06% interest in Anhui Chaodong Cement Company Limited (ACC), located in Anhui Province in the eastern PRC. The designed sellable production capacity of ACC is 5.1 million tonnes of cement and clinker per annum. In addition, Prosperity owns 16.11% of TCC Liaoning Cement Company Limited which has a designed saleable production capacity of 2 million tonnes of cement and clinker per annum.

The PRC is the World's second largest economy (behind the US) and the biggest buyer of iron ore; it is also the largest producer and consumer of cement.

This information is provided by RNS

The company news service from the London Stock Exchange

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