CITIC RESOURCES HOLDINGS LIMITED 
By Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
DISCLOSEABLE TRANSACTION ACQUISITION AND INCREASE OF INTEREST IN THE COPPABELLA AND MOORVALE JOINT VENTURE PURCHASE OF THE SALE INTEREST
CACL, an indirect wholly-owned subsidiary of the Company, has agreed to purchase the Sale
Interest, subject to pro-ration (if any) amongst other Accepting Participants.
The actual portion of the Sale Interest that CACL shall purchase is dependent upon the number of Accepting Participants. If all Non-Selling Participants elect to purchase the Sale Interest pursuant to the Pre-emption Right, each of them shall purchase a portion of the Sale Interest in the same proportion that its interest in the CMJV bears to the total interest of all Accepting Participants in the CMJV. In such circumstances, CACL shall purchase an additional 0.527% interest in the CMJV, thereby increasing its aggregate interest in the CMJV to 7.527%. In the event CACL is the only Accepting Participant, CACL shall purchase the entire Sale Interest, thereby increasing its aggregate interest in the CMJV to 14%.
The aggregate purchase price for the Sale Interest is A$112.9 million (HK$913.4 million), subject to adjustment in respect of cash calls and receipts (excluding income from coal sales prior to the Effective Date) between the Effective Date and the date of Completion.
The amount of the purchase price payable by CACL shall be dependent upon, and shall be adjusted according to, the portion of the Sale Interest that CACL ultimately purchases. The amount of the purchase price, before adjustment in respect of cash calls and receipts (excluding income from coal sales prior to the Effective Date) between the Effective Date and the date of Completion, that CACL shall pay ranges from a minimum of A$8.5 million (HK$68.8 million) for a
0.527% interest in the CMJV to A$112.9 million (HK$913.4 million) for the entire Sale Interest.
The purchase of the entire Sale Interest constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements under the Listing Rules.
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GENERAL Shareholders and potential investors should note that the purchase of the Sale Interest remains subject to the satisfaction of a number of conditions and, therefore, may or may not complete. Shareholders and potential investors are advised to exercise caution when dealing in the Shares and other securities of the Company. INTRODUCTION
CACL, a Participant and an indirect wholly-owned subsidiary of the Company, currently holds a 7%
interest in the CMJV.
In accordance with the Pre-emption Right, Winview has given notice to the Non-Selling Participants that it wishes to sell the Sale Interest for an aggregate purchase price of A$112.9 million (HK$913.4 million), subject to certain cash flow adjustments. CACL has elected to exercise its rights under the Pre-emption Right and agreed to purchase the Sale Interest, subject to pro-ration (if any) amongst other Accepting Participants.
The actual portion of the Sale Interest that CACL shall purchase is dependent upon the number of Accepting Participants. If all Non-Selling Participants elect to purchase the Sale Interest pursuant to the Pre-emption Right, each of them shall purchase a portion of the Sale Interest in the same proportion that its interest in the CMJV bears to the total interest of all Accepting Participants in the CMJV. In such circumstances, CACL shall purchase an additional 0.527% interest in the CMJV, thereby increasing its aggregate interest in the CMJV to 7.527%. In the event CACL is the only Accepting Participant, CACL shall purchase the entire Sale Interest, thereby increasing its aggregate interest in the CMJV to 14%.
25 January 2013
Parties to the Purchase Agreement
(1) Winview
(2) CACL
(3) CITIC Coal
To the best of the Directors' knowledge, information and belief and having made all reasonable enquiry, Winview and its ultimate beneficial owners are third parties independent of the Company and connected persons of the Company.
The Sale Interest represents a 7% interest in the CMJV and other related interests held by Winview. In accordance with the Pre-emption Right, each Accepting Participant shall acquire a portion of the
Sale Interest which shall be the same proportion that its interest in the CMJV bears to the total interest of all Accepting Participants in the CMJV.
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The actual portion of the Sale Interest that CACL shall purchase is dependent upon the number of Accepting Participants. If all Non-Selling Participants elect to purchase the Sale Interest pursuant to the Pre-emption Right, each of them shall purchase a portion of the Sale Interest in the same proportion that its interest in the CMJV bears to the total interest of all Accepting Participants in the CMJV. In such circumstances, CACL shall purchase an additional 0.527% interest in the CMJV, thereby increasing its aggregate interest in the CMJV to 7.527%. In the event CACL is the only Accepting Participant, CACL shall purchase the entire Sale Interest, thereby increasing its aggregate interest in the CMJV to 14%.
Accepting Participants may agree an alternate apportionment of the Sale Interest. However, CACL
has not agreed an alternate apportionment of the Sale Interest as of the date of this announcement.
The aggregate purchase price for the Sale Interest is A$112.9 million (HK$913.4 million), subject to adjustment in respect of cash calls and receipts (excluding income from coal sales prior to the Effective Date) between the Effective Date and the date of Completion, and has been determined by Winview following negotiations with a potential third party purchaser of the Sale Interest.
The amount of the purchase price payable by CACL shall be dependent upon, and shall be adjusted according to, the portion of the Sale Interest that CACL ultimately purchases. The amount of the purchase price, before adjustment in respect of cash calls and receipts (excluding income from coal sales prior to the Effective Date) between the Effective Date and the date of Completion, that CACL shall pay ranges from a minimum of A$8.5 million (HK$68.8 million) for a 0.527% interest in the CMJV to A$112.9 million (HK$913.4 million) for the entire Sale Interest.
The fair value of the Group's current 7% interest in the CMJV which is similar to the Sale Interest is about A$94.1 million (HK$761.3 million).
CACL shall fund the purchase price for the Sale Interest from internal resources.
The purchase of the Sale Interest remains subject to the satisfaction of certain conditions, including
Winview receiving the following:
(A) written notice under the Mining Act of the Minister's indicative approval to the transfer of the Tenements, to the extent of the Sale Interest to be transferred, to CACL, and that notice is either free from conditions or subject to conditions that are acceptable to CACL in its absolute discretion;
(B) written consent for Winview's financiers to the transfer of the Sale Interest and that consent is either free from conditions or subject to conditions that are acceptable to Winview in its absolute discretion;
(C) AMCI's Written Consent;
(D) Codrilla Contracts Written Consent and Release; and
(E) signed IUCD Deed of Assignment.
As at the date of this announcement, none of the above conditions has been satisfied.
Completion is expected to take place on or before 28 March 2013.
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REASONS FOR THE PURCHASE OF THE SALE INTEREST
Coal mining is a key business of the Group. In particular, the Group has been a long term investor in low volatile PCI coal through its recent shareholding interest in Macarthur Coal Limited (sold 2011) and through its current 7% interest in the CMJV and other direct interests in certain other coal tenements in Australia.
The Directors believe that low volatile PCI coal is an important resource and demand for low volatile PCI coal remains robust notwithstanding the current difficulties affecting the global economy. The Directors also believe that demand in the medium to long term for low volatile PCI coal will continue to be strong.
The purchase of the Sale Interest provides the Group with the opportunity to increase its overall interest in the CMJV and thereby enhance its total investment in coal mining and low volatile PCI coal in particular.
The Directors believe that the terms and conditions of the Purchase Agreement are fair and reasonable and in the interests of the Company and Shareholders as a whole.
The CMJV is an unincorporated joint venture established in December 2003 that operates the Coppabella and Moorvale coal mines and the Codrilla project, all located in the Bowen Basin, Queensland, Australia.
The current Participants are:
Name of Participant | Parent Company | Interest |
Peabody Energy Australia PCI Pty Ltd. | Peabody Energy Corporation | 73.3% |
CACL | the Company | 7.0% |
Mapella Pty Ltd. | Marubeni Corporation | 7.0% |
Winview | Sojitz Corporation | 7.0% |
KC Resources Pty Ltd. | JFE Shoji Trade Corporation | 3.7% |
NS Coal Pty Ltd. | Nippon Steel Trading Co. Limited | 2.0% |
The CMJV is one of only five producers of low volatile PCI coal in Australia. This coal is predominately sold to steel mills for use in the production of pig iron from iron ore in the blast furnace process. It is recognised as a cheaper alternative for coking coal which has been used traditionally in the blast furnace process. Low volatile PCI coal is high in carbon and energy but low in ash and sulphur and is more efficient in the blast furnace process and cheaper to prepare for injection.
The profit attributable to the Group's current 7% interest in the CMJV for the two financial years ended 31 December 2011 is as follows:
2011 | 2010 | |
Profit before tax and extraordinary items | A$ million (HK$ million) 17.2 (139.1) | A$ million (HK$ million) 21.6 (174.7) |
Profit after tax and extraordinary items | 12.0 (97.1) | 15.1 (122.2) |
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INFORMATION ON THE COMPANY
The Company is the listed natural resources flagship of CITIC Group and an integrated provider of strategic natural resources and key commodities.
Through its subsidiaries and associates, the Company has interests in oil, coal mining, import and export of commodities, aluminum smelting and manganese mining and processing.
The purchase of the entire Sale Interest constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is therefore subject to the reporting and announcement requirements under the Listing Rules.
GENERAL Shareholders and potential investors should note that the purchase of the Sale Interest remains subject to the satisfaction of a number of conditions and, therefore, may or may not complete. Shareholders and potential investors are advised to exercise caution when dealing in the Shares and other securities of the Company. DEFINITIONSFor the purpose of this announcement, the following words and expressions shall have the following meanings:
