On June 21, Chifeng Geelong Gold Mining Co., Ltd. (hereinafter referred to as“Chifeng Gold”) and Minmetals Resources Co., Ltd. (hereinafter referred to as “Minemetals Resources”) held a merger-signing ceremony in Beijing. Chifeng Gold mergers a 90% stake in Laos Sepon Copper and Gold Mine held by Minmetals Resources with US$275 million, becoming another major event in China's overseas gold industry regarding mergers and acquisitions.
On the same day, Chifeng Gold held a board meeting, agreeing that the company and the seller, Album Investment Private Limited, and the seller's guarantee party, Minmetals Resources Co., Ltd., signed a “share purchase agreement” with the effective conditions to acquire100% of the stock right of MMG Laos Holdings Limited held by the seller. Minmetals Resources Laos Holdings Co., Ltd. is a wholly-owned subsidiary of China Minmetals Resources. Its main asset is a 90% stake in Laos Sepon Copper-gold Mine, and another 10% of the mine is held by the Lao Government.
The Sepon Copper-gold Mine is an open-pit copper-gold mine located in Savannakhet, the southern province of Laos, and will soon be transferred to the deep copper copper mine. Minmetals Resources began to bid for the sale of the assets in 2017. Chifeng Gold won the bidding in multiple rounds of bidding for its advantages in technology and management in the exploitation of primary mines.
According to the announcement disclosed by Minmetals Resources on the Hong Kong Stock Exchange, as the end of 2017, the Sepon Copper-gold Mine maintains a gold ore reserve of 10.9 million tons, with an average grade of 3.9 g/t, and a rough calculation of gold is about 40 tons; and copper ore reserves are 25.3 million tons, with an average grade of 2.1%, and a rough calculation of copper metal is 530,000 tons. In 2017, Sepon Copper-gold Mine had revenue of US$390 million, with a profit before interest, taxes, depreciation and amortization (EBITDA) of US$120 million.
Zhao Meiguang, the controlling shareholder of Chifeng Gold; Lu Xiaozhao, chairman of Chifeng Gold; Gao Xiaoyu, general manager of Minmetals Nonferrous Metals Co., Ltd., non-executive director of Minmetals Resources; Xu Jiqing, the executive director of Minmetals Resources, executive general manager and other relevant leaders participated in the signing ceremony.
Zhao Meiguang believes that the successful signing of the M&A project expresses the firm determination of Chifeng Gold to become internationalized, and will further enhance the position and influence of Chifeng Gold in the gold industry, opening an important window for its leap-forward international development, laying a solid foundation for Chifeng Gold to achieve its grand vision.
"This M& A is a historical milestone for Chifeng Gold. It is an important step for Chifeng Gold going abroad for international development." Lu Xiaozhao said that Minmetals Resources, as an overseas platform company of China Minmetals Holding Co., Ltd., an international management team has rich experience in international mining development and strong management strength, encompasses many overseas high-quality mineral resources, is the leader and pioneer of Chinese mining overseas mergers and acquisitions. The cooperation between Chifeng Gold and Minmetals Resources will surely achieve the goal of strategic win-win. At the same time, the two sides will take this cooperation as an opportunity to carry out multi-level in-depth exchanges in overseas mergers and acquisitions, mining exploration and development, as well as in technology research, jointly creating a new chapter of strategic cooperation for mutual benefit and common development.
“Unite together to strive for greater victories, jointly exploring a better future.” Gao Xiaoyu said that cooperation agreement reached by Chifeng Gold and Minmetals Resources on the basis of their respective development strategies, is only the beginning of a series of in-depth cooperation, laying the foundation for in-depth cooperation of bilateral mineral chain. Minmetals Resources has the obligation and will do its utmost to cooperate with Chifeng Gold in the follow-up delivery of the project, and will also share overseas mining development experience with Chifeng Gold.
Xu Jiqing also pointed out that the signing of the contract will play a pivotal role in the changes of the asset structure and development of both parties. It is expected that the Laos Copper-gold Mine, under the leadership of new shareholders, can further increase exploration investment, optimize mining and beneficiation processes, and reduce costs into the best level, tap into greater development potential, making it a demonstration base for the development of overseas copper and gold mines.
