December 03, 2008

Yunnan Chihong Zinc to buy 40% of Yunnan Jinding

It is reported that China's Yunnan Chihong Zinc & Germanium Co plans to sell up to CNY10.47 billion worth of shares in a private placement to buy a 40% stake in smaller rival Yunnan Jinding Zinc Co.

Chihong Zinc said it will sell up to 130 million new shares at CNY80.56 each. Chihong's shares closed at CNY77.92 on January 17 and have been suspended from trading since then pending the announcement related to the private placement. It said the shares will be sold to Yunnan Metallurgical Group, the State owned Assets Supervision and Administration Commission's branch in Yunnan Lanping Bai Autonomous Region, Nujiang State owned Assets Management Co and Yunnan Copper Industry Co.

Chihong said the stock sale is still pending approval from the company's shareholders and China's securities regulator. It said it would issue up to CNY 10.47 billion worth of shares to acquire a 40% stake in Yunnan Jinding Zinc Co ending a competition with Sichuan Hongda Co which has also vied for the stake.

According to a filing with the Shanghai Stock Exchange Chihong will sell up to CNY 130 million backed A shares at CNY 80.56 each to four companies led by Yunnan Metallurgical Group, for the 40% stake. The placement needs shareholder and regulator approval.

Jinding owns Asia's largest lead zinc mine in Lanping, southwestern Yunnan Province. Media reports have estimated the Lanping mine has a potential value of more than CNY 100 billion. Hongda already owns 51% in Jinding and Hongda's parent holds another 9%.

Hongda, which had wanted all the shares it doesn't own in Jinding, said it would acquire the 9% stake in Jinding from its parent company through a share placement which values the stake of between CNY 1.8 billion and CNY 2.16 billion.