Prosperity Minerals Holdings Ltd Renewal of Master Iron Ore Off-take Agreement (8715E)

TIDMPMHL

RNS Number : 8715E

Prosperity Minerals Holdings Ltd

16 May 2013

Prosperity Minerals Holdings Limited

("Prosperity" or "the Company")

Renewal of Master Iron Ore Off-take Agreement

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 renewed its master iron ore off-take agreement (the "New Master Off-take Agreement") with Grace Wise Pte Limited ("Grace Wise") for the purpose of purchasing iron ore from Malaysia.

The previous agreement between Prosperity and Grace Wise, which was first announced on 1 June 2010, expired on 31 March 2013. Under the New Master Off-take Agreement, the iron ore is to be offered to Prosperity between 1 April 2013 and 31 March 2016, on substantially the same terms as the previous agreement. Consistent with previous arrangements, Prosperity will benefit from the right, but not the obligation, to purchase iron ore from Grace Wise at the prevailing market price for the region.

The maximum value of transactions between the parties during this period will be US$ 1.1 billion.

Implications under the AIM Rules

Mr. David Wong, a Director and substantial shareholder of the Company, is indirectly interested in 70% of Grace Wise. Under AIM Rules 13 and 16, if the value of Prosperity's purchases from Grace Wise in a 12 month period exceeds 5% of its turnover in the same period, this would constitute a related party transaction. Under the previous agreement with Grace Wise, which dates from 2010, annual purchases did not exceed 5%.

The Directors (other than Mr. Wong) have consulted the Company's Nominated Advisor, Daniel Stewart & Company plc, with reference to the terms of the New Master Off-take Agreement. These are the terms under which transactions might occur and are deemed fair and reasonable as far as the Company's shareholders are concerned.

Implications under the HK Listing Rules

The Company's majority shareholder, Prosperity International Holdings Limited ("PIHL") is listed on the Hong Kong Stock Exchange. As required by the Hong Kong Listing Rules, completion of the New Master Off-take Agreement is conditional upon PIHL obtaining the approval of its independent shareholders. Prior to obtaining such shareholder approval, Prosperity Macao may enter into transactions with Grace Wise up to a maximum limit of US$ 12 million per annum, as permitted by the Hong Kong Listing Rules.

PIHL expects to despatch further information to its shareholders regarding the New Master Off-take Agreement. As and when PIHL provides such information to its shareholders, the Company will update its shareholders at the same time.

 
 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

END

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