Australian miner Tianshan Goldfields has signed a conditional agreement to sell its entire portfolio of Chinese assets to China Power Sino Renewable Resources for $22.5m.
Under the terms of the Memorandum of Understanding, Hong Kong-registered Sino has paid a deposit of $1m and has been granted 60 days to complete due diligence on the assets.
Tianshan’s primary Chinese asset is its 90%-owned Gold Mountain Project, located in north-west China, that comprises 11 exploration licenses covering 576km.
Tianshan plans to use money raised from the sale to acquire interests in other companies or projects, some of which have already been identified.
The global credit crisis has generated a range of opportunities for companies with strong technical team and considerable cash reserves, Tianshan managing director Jason Bontempo said.
“If we were able to sell some or all of our Chinese portfolio for a suitable amount Tianshan would be able to acquire companies or assets that in our view are significantly undervalued,” Bontempo said.
Tianshan will have cash reserves of more than A$35m after completing the transaction and negotiations with other assets will begin once the transaction is complete, the company said.