BEIJING, Jan. 13, 2011 - China Shen Zhou Mining & Resources, Inc. ("China Shen Zhou", or the "Company"), a company engaged in the exploration, development, mining and processing of fluorite, zinc, lead, copper, and other nonferrous metals in China, today announced that its subsidiary Xingzhen Mining Ltd. ("Xingzhen") has signed an equity transfer agreement with the shareholders of Xinyi Fluorite Company Ltd. ("Xinyi"), which is based in Jingde County, Anhui Province. Pursuant to the agreement, Xingzhen has agreed to pay RMB 65 million (approximately US$ 9.85 million) to acquire a 55% equity position in Xinyi. Payment under the agreement consists of RMB 50 million (approximately US$ 7.58 million) in China Shen Zhou's common shares and RMB 15 million (approximately US$ 2.27 million) in cash.
Under the agreement, Xingzhen, together with two individual investors also agreed to pay an additional RMB 28 million (approximately US$ 4.24 million) to Xinyi including RMB 20 million (US$ 3.03 million) for the renovation of Xinyi's mining facilities.
This acquisition was made to further develop China Shen Zhou's fluorite resources for the production of value-added fluorine chemicals one of its core businesses. As such, Xinyi's three primary assets are interests in flourite mines in Anhui Province as follows: 1) the mining permit to the Xinyi Qingzheng Fluorite Mine No.1, 2) the mining permit for the Guangrong Fluorite Mine, and 3) the mining rights and assets of the Sanxi Old Town flotation plant.
The management of China Shen Zhou Mining hope that the new entity could produce approximately 35,000 metric tons of fluorite powder to generate about $10 million in revenue and between $5 million to $6 million of net income in 2011.Then the fluorite powder production of Xinyi is expected to increase by about 70% to 60,000 metric tons next year.
Ms. Xiaojing Yu, Chief Executive Officer of China Shen Zhou, commented, "this acquisition is very favorable as the resources are readily available and the mine has an excellent operating track record since 2003 of extracting high-grade fluorite."
"This is our first fluorite transaction to take advantage of the government's policy to encourage consolidation of smaller fluorite operations. We believe that by possessing the largest fluorite mine in northern China, we are attracting increasing interest from smaller, regional firms where we can leverage our sales, production, and our marketing network. This is our first venture outside our Mongolian fluorite base and being located in Anhui Province also provides access to much lower-cost processing. Our combined stock and cash offer created the incentive for the owners of Xinyi to enter into the transaction and it shows their confidence in our future," Ms. Yu concluded.
