Siberian Mining Group Company Limited announced that it has entered into the Share Subscription Agreement with Trenaco SA a Swiss incorporated company including two Columbian subsidiaries and a Russian subsidiary.
With a strong global business network, Trenaco engages in the business of sourcing, trading and supplying varied natural resources commodities, such as oil and its related products, coal, biofuel, agricultural products and fertilizers. Trenaco is planning to execute long-term off take contracts with local Colombian suppliers of coal to secure steady supply of coal in Colombia which is the 4th largest coal exporter of the world with 70 million tonnes of coal being exported in 2010.
It has the necessary network to secure such supply chain generating from Colombia and the customer base, which are the key elements to the success in the current business environment of coal trading business. In addition, the extra supply capacity of coal from Colombia will meet the needs of the existing customers of the Company. Furthermore, Trenaco will explore opportunities to enter into the coal mining business in Colombia so as to complement with its existing business. SMG will be able to assist Trenaco to develop in such business based on the Company's existing coal mining experience in Russia.
The company will invest USD 15,000,000 to Trenaco for the enlarged issued share capital and it will take up 70% of the entire issued share capital on a fully-diluted basis upon completion.
Trenaco intends to use the proceeds from the Subscription for its future business expansion
1. To facilitate larger trading volume of commodities
2. To further engage in refining its activities including the building of furnaces to increase the supply of coke
3. To increase its export trading capacity
4. To develop the newly-established Russian subsidiary which shall participate in exporting petroleum products and coal from Russia?
5. For the Trenaco Group's working capital. Trenaco is in preliminary discussion with a major steelmaker in Asia to form a joint venture for the setting-up of an electric furnace in Colombia to increase the supply of coke and its trading capacity.
The substantial acquisition of Trenaco follows SMG's successful bid for mining rights in Russia in September 2010 and represents a further successful step in the Company strategy to develop a broad-based, integrated resources group.
Mr Lim Ho Sok Chairman of SMG said "This is an important further strategic step for SMG in the future development of our mining business. Trenaco is an experienced international commodities trader with strong track record and its business complements SMG existing coal business in Russia and Asia. Through Trenaco, the Company will be able to penetrate into the Colombian market where is of hidden treasure for natural resource business with government's favorable policies for foreign investments. Moreover, the Company is more accessible to new products markets developed in the region. With our professionalism and sustainable business development, we have faith in leveraging Trenaco expertise in sourcing, trading and supplying the full spectrum of natural resources products and taking advantage of its extensive business network, so as to maximize the long-term benefits for our shareholders."
