Prosperity Minerals Holdings Ltd Proposed Disposal of Hangzhou Real Estate Project (8526D)

TIDMPMHL

RNS Number : 8526D

Prosperity Minerals Holdings Ltd

02 May 2013

2 May 2013

Prosperity Minerals Holdings Limited

("Prosperity" or "the Company")

Proposed Disposal of Hangzhou Real Estate Project

Prosperity Minerals Holdings Limited ("PMHL.L"), an iron ore trading business and real estate owner/developer in the People's Republic of China ("PRC"), is pleased to announce that it has conditionally agreed to dispose of its 50% interest in a commercial property development site in Hangzhou (the "Hangzhou Project"), the capital of Zhejiang Province in Eastern China, to Hangzhou Xihu Tea Market Company Limited ("Hangzhou Xihu"). The prospective consideration for the disposal is RMB 221.8 million (USD 36 million), which would result in a pre-tax profit on disposal of approximately RMB 24 million (USD 3.9 million).

The Company acquired its 50% interest in the Hangzhou Project in March 2011 and on the 6 February 2013, announced plans to increase this to 60% for a consideration of RMB 40 million (USD 6.4 million), with a view to taking the lead in the development. The proposed disposal represents a reasonable premium to this February value and, since construction, which had originally been due to start in 2012, has not commenced because the construction permit has been delayed, Prosperity believes it is prudent to realise cash and profit from the disposal which it can apply to other more attractive prospective projects and working capital.

Under the terms of the Letter of Intent regarding the proposed disposal, Hangzhou Xihu will pay the Consideration as follows:

(i) a deposit of RMB 10 million (the "Deposit") is payable within 3 business days of signing of the Letter of Intent;

(ii) 30% of the consideration (being approximately RMB 66.5 million) is payable within 3 business days of signing the sale and purchase agreement for the disposal, of which the Deposit will be applied as part payment; and

(iii) the remaining balance is payable within 3 business days after the relevant authorities in the PRC have approved the Disposal.

The Deposit is non-refundable if Hangzhou Xihu fails to complete the disposal for reasons other than unsatisfactory due diligence on the Hangzhou Project. In the event that Prosperity fails to complete the disposal, it will refund the Deposit and pay an additional RMB 10 million to Hangzhou Xihu.

 
Prosperity Minerals Holdings Limited 
 
 Patrick Li 
 
 Neelke Kruger-Logan                    +852 3187 2618 
 
  Citigate Dewe Rogerson 
 
  Martin Jackson 
                                          +44 (0) 20 7638 
  Priscilla Garcia                        9571 
 
  Daniel Stewart & Company plc 
 
  Corporate Finance: Paul Shackleton, 
  Antony Legge, Emma Earl 
                                          +44 (0) 20 7776 
  Corporate Broking: Martin Lampshire     6550

Notes to Editors:

Prosperity (AIM: PMHL) is:

- an iron ore trading business serving the PRC;

- a specialised real estate owner and developer in the same market; and

- an investor in two cement plants, also in the PRC.

Prosperity's iron ore trading business has been operating since 1992 and sources iron ore, for shipment and use in the PRC, from major international iron ore producers in South Africa, Brazil, Australia and South East Asia, Thailand and Malaysia in particular. The majority of the Company's iron ore is sold to large steel manufacturers in the PRC. In the fiscal years ended 31 March 2011 and 2012, Prosperity shipped 6.3 million tonnes and 4.8 million tonnes of iron ore respectively.

In December 2010, Prosperity acquired a 35% effective interest in United Goalink Limited (UGL), a Brazilian mining operation which owns approximately 600 square kilometres of exploration rights and 3 square kilometres of mining concession in the State of Ceara. In the year ended 31 March 2012, UGL shipped 218,808 tonnes of iron ore (which is included in the above tally).

Prosperity has operated a real estate investment and development division since February 2010 which is focused on creating an attractive portfolio of PRC property and development assets. The Company has also entered into a number of agreements with partners to develop residential, commercial and recreational projects principally in Guangzhou City and Changzhou City in the southern PRC. Prosperity also owns an interest in an existing commercial building in Guangzhou, which is a regional capital and is located in the Pearl River Delta, the foremost economic zone in the southern PRC.

Prosperity has two investment associates in the cement manufacturing industry in the PRC. The Company holds a 33.06% interest in Anhui Chaodong Cement Company Limited (ACC), located in Anhui Province in the eastern PRC. The designed sellable production capacity of ACC is 5.1 million tonnes of cement and clinker per annum. In addition, Prosperity owns 16.11% of TCC Liaoning Cement Company Limited which has a designed saleable production capacity of 2 million tonnes of cement and clinker per annum. As announced on 6 February 2013, this latter shareholding is the subject of a conditional sale and purchase agreement.

The PRC is the World's second largest economy (behind the US) and the biggest buyer of iron ore; it is also the largest producer and consumer of cement.

This information is provided by RNS

The company news service from the London Stock Exchange

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