Rare Earths Global Limited Acquisition of remaining 39% stake in Sanxie Plant (0208I)

TIDMREG

RNS Number : 0208I

Rare Earths Global Limited

19 July 2012

 
 19 July 2012 
 

Rare Earths Global Limited

("REG" or the "Company")

Acquisition of remaining 39% stake in Sanxie Separation Plant

Rare Earths Global Limited (AIM: REG), a leading mining services group focused on the extraction, separation, refinement and trading of rare earth elements, oxides and other related products, is pleased to announce that it has exercised its call option to acquire the remaining 39% of Pingyuan Sanxie Rare Earth Smelting Co Ltd ("Sanxie Plant") from Grace Coast Limited ("Grace Coast") a company wholly owned by Mr. Tong Man Tak.

The Sanxie Plant is the rare earth separation and refining business of the Company which was established in 1994 and is principally engaged in the business of separating, refining and producing single rare earth elements, rare earth oxides, rare earth concentrates, rare earth metals and other rare earth products for sale on both the domestic and international markets. In July 2010 the Company acquired a 60% share in the Sanxie Plant and at the time of Admission on AIM in March this year one of its stated objectives was to exercise the option to acquire the outstanding 39% owned by Grace Coast.

The 39% of the Sanxie Plant will be acquired by the issue of 4,000,000 new ordinary shares in REG and a further US$10.0 million in cash which shall be paid in three tranches, US$3.0 million up on signing of the agreement, a further US$3.0 million on or before 15 August 2012 and a final tranche of US$4,000,000 on or before 15 September 2012. The total consideration being paid by REG for the 39% of the Sanxie Plant (based on the closing middle market price of an ordinary share in REG on 18 July 2012, being 337.5 pence per share) is approximately US$31.06 million. The initial tranche will be funded out of the Company's internal resources with the subsequent tranches funded out of negotiated facilities. For the year ended 31 December 2011 the profit attributable to the 39% stake of the Sanxie Plant was RMB19,570,000 (US c.$3.07 million). In addition, Grace Coast has agreed to a twelve month lock-in of the 4,000,000 new ordinary shares being issued to them as consideration from the date of completion of the transaction.

Accordingly, application has been made for the 4,000,000 new ordinary shares to be admitted to trading on AIM and it is expected that admission will take place on 25 July 2012.

The new ordinary shares will rank pari passu with the existing shares of the Company. Following this allotment, the enlarged issued share capital of the Company will increase to 67,587,681 ordinary shares.

Following completion of the transaction REG will own 99% of the Sanxie Plant with the remaining 1% held by a local Chinese partner as required under PRC ownership regulations.

Mr. Tong will, following completion of the transaction, be beneficially interested in 4,889,507 ordinary shares in REG representing 7.23% of the enlarged issued share capital of the Company.

Simon Ong, Chief Executive Officer of REG, commented: "The acquisition of the remaining 39% of the plant at Sanxie is an important first step in the continued development and expansion of the production capacity of REG. We are pleased to be able to deliver on one of our stated objectives as set out at the time of our Admission to AIM and the Board will continue to pursue its strategy with news to follow on the facility arrangements with Credit Suisse in due course."

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For further information:

 
     Rare Earths Global Limited 
     Simon Ong, Chief Executive Officer         Tel: [phone] 
     Brian Ho, Finance Director               www.rareearthsglobal.com 
 
 
     Charles Stanley Securities 
     Nominated Adviser & Broker 
     Dugald J. Carlean / Carl Holmes       Tel: [phone] 
                                               www.csysecurities.com 
 

Media enquiries:

 
       Abchurch Communications Limited 
     Joanne Shears / Quincy Allan               Tel: [phone] 
     [e-mail]              www.abchurch-group.com 
 
 

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