149 Tonnes Gold Reserves - For Mining Co

Around £4.1 bn of Company Assets!

Gold mining and processing company China Precious Metal Resources Holdings Co., Ltd. (CPM) announces that a sale and purchase agreement was signed on 21 December 2010 in respect of the acquisition of a gold mine in Henan Province, the PRC, for a consideration of 1.18 billion yuan. Upon completion of the acquisition, the Group will have total gold reserves and resources of 149 tonnes.

The mine is located at Zhifang Village of Tantou Zhen of Luanchuan County in Henan Province and has an aggregate area of approximately 8.9940 square kilometers. Completion of the acquisition is conditional upon the Group having obtained a technical report confirming that the total amount of the reserves and the resources of the mine are not less than 25 tonnes.

The consideration of 1.18 billion yuan was determined taking into account the valuation of the target company of approximately 1.401 billion yuan as at 30 November 2010. The consideration will be settled as to HK$500 million by cash utilising the Group's internal resources, and as to HK$680 million by the issue of 328,185,328 consideration shares at an issue price of HK$2.072.

Dr. Dai Xiaobing, Chief Executive Officer and Executive Director of CPM said: "The acquisition is in line with our business development strategy in the gold mining industry. Considering the favourable prospects of the gold mining industry, the board believes that the consideration, which represents a discount of approximately 27.39% to the target company's valuation, is in the interests of the Group and our shareholders."

The issue price of HK$2.072 represents a premium of approximately 17.73% over the closing price of HK$1.76 on the date of the agreement, and a premium of 17.59% over the average closing price of HK$1.762 for the last five consecutive trading days.

Dr. Dai added: "The acquisition enables us to exceed our yearly growth target of reaching 100 tonnes of gold reserves and resources. The strategic locations of our mines in China's three fold belts also help enhance our overall efficiency."

Source: China.org.cn