PMHL Prosperity

TIDMPMHL

RNS Number : 7699Y

Prosperity Minerals Holdings Ltd

27 February 2013

27 February 2013

Prosperity Minerals Holdings Limited

("Prosperity" or "the Company")

Completion of Master Restructuring Agreement

The Company is pleased to announce today that it has completed the Master Restructuring Agreement (the "Agreement") with ZC Group to restructure the settlement of outstanding prepayments, which currently stand at US$55 million, made by Prosperity to secure reliable and competitively priced supplies of iron ore.

The terms of the Agreement were outlined in an announcement on 22 October 2012 with a key element of this proposal being to utilise part of the prepayment cash to buy an iron ore processing plant in Malaysia (the Gebeng Plant) from ZC Group. The Agreement was conditional upon, inter alia, the completion by Prosperity of satisfactory due diligence.

Under the terms of the Agreement, Prosperity has acquired the Gebeng Plant in Malaysia from ZCM Minerals Sdn. Bhd ("ZCM"), part of ZC Group. The proposed consideration of US$23.4 million was based on an independent valuation report from Jones Lang LaSalle Corporate Appraisal and Advisory Limited. However, the consideration was reduced by US$3.9 million to US$19.5 million after certain assets were excluded from the acquisition, as agreed between the parties. Prosperity has leased the plant back to ZCM on an exclusive basis for a fee of US$2.5 million per annum. In the year to June 2012, the Gebeng Plant had revenues of US$31.5 million and profit before tax of US$3.4 million.

The Company also has an option ("Put Option") to require ZCM to repurchase the Gebeng Plant at a price equal to the consideration plus an annual rate of return of 8% between today and the exercise of the Put Option.

In addition, the Company has received a cash repayment of US$2.4 million from ZC Group. Going forward, Prosperity will continue to be supplied with iron ore by ZC Group under the terms of the Master Restructuring Agreement.

The capitalised terms used in this announcement have the same meaning as those defined in the announcement dated 22 October 2012.

 
 Prosperity Minerals Holdings Limited 
  Patrick Li 
  Neelke Kruger-Logan                    +852 3187 2618 
 Citigate Dewe Rogerson 
  Martin Jackson                         +44 (0) 20 
  Priscilla Garcia                        7638 9571 
 Daniel Stewart & Company plc 
  Corporate Finance: Paul Shackleton, 
  Antony Legge, Emma Earl                +44 (0) 20 
  Corporate Broking: Martin Lampshire     7776 6550 
 

Notes to Editors:

Prosperity (AIM: PMHL) is:

- an iron ore trading business serving the PRC;

- a specialised real estate owner and developer in the same market; and

- an investor in two cement plants, also in the PRC.

Prosperity's iron ore trading business has been operating since 1992 and sources iron ore, for shipment and use in the PRC, from major international iron ore producers in South Africa, Brazil, Australia and South East Asia, Thailand and Malaysia in particular. The majority of the Company's iron ore is sold to large steel manufacturers in the PRC. In the fiscal years ended 31 March 2011 and 2012, Prosperity shipped 6.3 million tonnes and 4.8 million tonnes of iron ore respectively. In December 2010, Prosperity acquired a 35% effective interest in United Goalink Limited (UGL), a Brazilian mining operation which owns approximately 600 square kilometres of exploration rights and 3 square kilometres of mining concession in the State of Ceara. In the year ended 31 March 2012, UGL shipped 218,808 tonnes of iron ore.

Prosperity has operated a real estate investment and development division since February 2010 which is focused on creating a portfolio of PRC property and development assets with good upside potential and manageable risk. The Company has entered into a number of agreements with its partners to develop recreational, commercial and residential projects in Guangzhou City and Changzhou City in the southern PRC and Hangzhou City in the east. Prosperity also acquired interests in an existing commercial building in Guangzhou, which is a regional capital and is located in the Pearl River Delta, the foremost economic zone in the southern PRC.

Prosperity has two investment associates in the cement manufacturing industry in the PRC. The Company holds a 33.06% interest in Anhui Chaodong Cement Company Limited (ACC), located in Anhui Province in the eastern PRC. The designed sellable production capacity of ACC is 5.1 million tonnes of cement and clinker per annum. In addition, Prosperity owns 16.11% of TCC Liaoning Cement Company Limited which has a designed saleable production capacity of 2 million tonnes of cement and clinker per annum.

The PRC is the World's second largest economy (behind the US) and the biggest buyer of iron ore; it is also the largest producer and consumer of cement.

This information is provided by RNS

The company news service from the London Stock Exchange

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