Sino Prosper to acquire stake in Chinese gold mining firm

3 January 2012 (Last Updated January 3rd, 2012 18:30)

Sino Prosper State Gold Resources has signed an agreement with Guizhou Qianxi'nan Prefecture Longyu Mining to acquire a majority stake in the company.

Sino Prosper State Gold Resources has signed an agreement with Guizhou Qianxi'nan Prefecture Longyu Mining to acquire a majority stake in the company.

Sino Prosper will acquire a 77% stake in Guizhou Qianxi'nan for a total value of 550m yuan ($87.3m).

The acquisition enables the company to further diversify its portfolio of precious metal assets.

A total of 120m yuan ($19.06m) will be paid in a refundable deposit, 230m yuan ($36.54m) through issuance of a five-year convertible bonds and 200m yuan ($31.7m) through issuance of a five-year promissory note bearing interest at 0.15% per annum.

Sino Prosper chairman Leung Ngai Man held a 19.30% equity interest in Sino Prosper as of 30 December 2011.

Under the terms of the acquisition agreement, Leung will not hold more than 29% of the total number of shares in issue.

Guizhou Qianxi'nan holds a mining permit on Qing Jiao Gold Mine located in Xiongwu Village, Xingyi, Guizhou Province with mining area of approximately 0.6033km2.

The current mining permit from the Chinese Government is valid up to July 2015.

Sino Prosper CEO Richard Sung said that the company is very excited by the potential acquisition and its positive impact on expanding and further diversifying Sino Prosper's resource base and future production.

"The proposed acquisition is consistent with our strategy of acquiring production or near-production assets through our strategic relationships in China," said Sung.

"We are confident that the acquisition and the developments at our Aohanqi project in Inner Mongolia and Zhongyi project in Heilongjiang Province will continue to enhance the value of Sino Prosper for our shareholders."

The closing of the acquisition is subject to a number of conditions and due diligence.