Tianshan sells China assets for $22m, eyes acquisitions
miningweekly.com
By: Esmarie Swanepoel
19th August 2009
Updated 3 hours ago
JOHANNESBURG (miningweekly.com) - Australia-based gold company Tianshan Goldfields has reached conditional agreement to sell all its Chinese assets to Hong Kong registered company China Power Sino Renewable Resources for $22,5-million.
Tianshan’s main asset in that country is its 90%-owned Gold Mountain project, located in North West China. The project comprises 11 exploration licences in the Tulasi Basin covering a combined total area of 576 km2.
The company has been targeting the completion of a full feasibility study in 2009 and production from 2010 of about 65 000 oz/y, subject to receipt of relevant approvals from Chinese government authorities, the company said on Wednesday.
Tianshan has made the decision to sell its Chinese portfolio based on a review of its assets and future strategy by the current board in recent months.
“The global credit crisis has generated a range of opportunities for companies that have a strong technical team and a considerable cash backing,” said Tianshan Goldfields MD Jason Bontempo.
“Following the detailed review of the company and its assets the board determined that 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,” he added.
Tianshan has identified a range of opportunities at both the project and company level that it believed could return significant value to the company and its shareholders in a more suitable timeframe. Once the transaction with Sino Power was completed, these negotiations would be pursued.
“We believe the price we have achieved for our Chinese portfolio is significantly higher than the enterprise value by the equity market and are confident that the sale proceeds will be applied to an acquisition or acquisitions that will add significant value to the company and its shareholders,” Bontempo added.
Post the transaction, Tianshan would have cash reserves in excess of A$35-million.
Tianshan said that the parties would now proceed to negotiate and enter into a definitive sales and purchase agreement by October.
Under the terms of the memorandum of understanding (MoU) between the parties, Sino Power has paid a deposit of $1-million to Tianshan and has started further due diligence on the assets. This due diligence, which is a condition to the sale, will be completed within 60 days. The sale is also subject to shareholder approval. |
