GobiMin (GMN-V) has agreed to sell most of its equity interest in the Yanxi copper deposit in China’s Xinjiang province for $9 million in convertible bonds and cash to China Daye Non-Ferrous Metals Mining (661-HK).
The company says the deal gives it a $6.86-million gain on disposal overall. Once the transaction is complete, GobiMin will have received $569,000 in cash and $8.54 million in convertible bonds.
The Yanxi copper deposit is held by Xinjiang Tongxing Minerals. GobiMin owns a 40% equity interest in Xinjiang Tongxing while two local Chinese companies hold the remaining 60%.
As a part of the agreement, GobiMin will carry out a reorganization to form a new holding company for Xinjiang Tongxing.
China Daye will acquire an 80% equity interest in the Yanxi copper deposit including a 32% equity interest from GobiMin.
GobiMin, meanwhile, will keep an 8% indirect equity interest in the Yanxi deposit once the transaction has been completed.
China Daye is listed on the Hong Kong stock exchange and is 20.8% owned by a Chinese state-owned enterprise.
GobiMin can convert the bonds into listed shares of China Daye within 24 months from the issue date; otherwise GobiMin has the option to receive the outstanding principal plus an interest rate of 1% per year for the bonds.
If the transaction cannot be completed due to the fault of Gobi- Min, the company will reimburse China Daye.
There’s another twist. Xinjiang Tongxing is in the process of applying for a mining licence for the Yanxi deposit.
Half of the convertible bonds won’t be delivered until after the mining licence is granted.
If a mining licence isn’t granted by the end of 2010, GobiMin has guaranteed to refund China Daye for everything and China Daye will then transfer the interest in the Yanxi copper deposit back to GobiMin.
GobiMin estimates the mining licence should be granted by the end of October 2010, based on normal processing procedures in China.
Yanxi is located about 115 km southwest of Hami city in eastern Xinjiang, on a property that spreads over 21.57 sq. km.
The property has indicated resources of 15.38 million tonnes grading 0.75% copper for 254 million lbs. copper.
There are also inferred resources of 10.23 million tonnes grading 0.71% copper for 160 million lbs. copper.
Be the first to comment on "GobiMin sells Yanxi deposit"