1st Mining Acquisition is Working Out

China-based Qiao Xing Universal Resources (XING) is in the process of divesting it telecommunication equipment business that otherwise known as Qiao Xiao Mobile Communication (QXM). Eventually, XING will become a mining company and will probably be evaluated as such.

Currently, the company reports two segments of business: telecommunication business and mining. In 3Q10, the former had $42.8 million in revenue but lost $7.9 million. The later had $12 million in revenue and yet claimed a profit of $3.4 million.

Two of the three mining business were acquired in December 2010, so the 3Q2010 result only incorporated the 100% residual returns from Chifeng HaoZhou Mining Co., a business the XING acquired from its Chairman Mr. Wu Rui Lin in April 2009.

According to this SEC filing, the price tag for the interest was $110 million. The company paid $30 million in cash and issued 40 million restricted shares of the company s common stocks valued at $2.00 each. Given the fact that the company has 90 million shares outstanding as of September 30, 2010, a year and half after the acquisition, the dilution was not something one can take it easily.