Jun. 1 – In yet another sign of the increasing value and strength of Mongolian companies, Mongolian Mining Corp (MMC) has agreed to pay US$464 million for a coking project owned by Hong Kong's Kerry Group. MMC, which is Mongolia's biggest coking coal exporter, signed the deal on Tuesday to buy QGX Coal from Kerry Mining and could end up paying as much as US$950 million if the mine hits certain targets. The deal is the biggest acquisition by a Mongolian mining company to date.
QGX Coal owns the Baruun Naran project within the Tavan Tolgoi coal fields in the South Gobi Desert. The mine contains 185 million tons of confirmed reserves and 282 million tons of additional resources, adding to MMC's existing 286 million tons of reserves and 500 million tons of resources. MMC will make an upfront cash payment of US$100 million and has raised US$85 million through a convertible loan with an 18-month maturity, 20 percent premium and a 2 percent coupon. Kerry is providing a vendor loan of US$279 million that is due to be settled with a few months of the closing.
The price is subject to adjustment based on the confirmed reserves position of the company in 18 months' time, when MMC will also pay a royalty based on the mine's production exceeding certain thresholds. The aggregate amount for all forms of consideration is capped at US$950 million. The sale looks like a good deal for Kerry, which paid US$259 million for the mine in 2008.
Tavan Tolgoi is one of the few remaining largely unexploited sources of high-quality coking coal in the world and the closest coking coal formation to China. Mine development started in 2010 and it is now ready for coal production.
Coke prices have risen in tandem with demand for steel, which uses coking coal in its manufacturing, but supply constraints have also helped to drive the price higher. MMC became the first Mongolian-owned company to trade on the Hong Kong stock exchange in October last year in a deal led by Citi and J.P. Morgan. Citi also advised MMC on this deal. The company is controlled by the MSC Group, a Mongolian conglomerate that is the largest taxpayer in the country and a market leader in numerous businesses.
Related Reading
Investment Opportunities and Developments in Mongolia
This new, 12-page introduction features the very latest developments in Mongolia in terms of foreign investment in the country. With contents derived from speeches made by, and interviews with the Mongolian president, prime minister, finance minister and Resources Ministry, this report outlines both the opportunities and development risks in the country.
Mongolia Connects to Hong Kong with Direct Flights and Consulate
Source: 2point6billion.com - Foreign Direct Investment in Asia
0 comments:
Post a Comment