Approval of Daye Metal Acquisition at EGM Marks Milestone for Parent Company to List Premier Assets

Mar 08, 2012, 05:50 ET from China Daye Non-Ferrous Metals Mining Limited

HONG KONG, March 8, 2012 /PRNewswire-Asia/ -- China Daye Non-Ferrous Metals Mining Limited ("China Daye" or the "Company") (Stock Code: 00661) today received approval from shareholders at an extraordinary general meeting to acquire Daye Nonferrous Metals Co., Ltd. ("Daye Metal"). The acquisition, which is successfully completed today, is a major strategic move by China Daye's parent company, Daye Nonferrous Metals Corporation Holdings Limited (the "Parent Company"), to float the premier assets of the Parent Company through its listing platform, China Daye.

China Daye will acquire a 95.35% equity interest in Daye Metal from Daye Metal's largest shareholders China Times Development Limited ("China Times") and China Cinda (HK) Asset Management Co., Limited ("Cinda HK") at a consideration of approximately RMB5.816 billion (equivalent to approximately HK$6.872 billion), which is to be satisfied by the issue of new shares and convertible notes by the Company. The Parent Company, through its indirectly wholly-owned subsidiary, China Times and persons acting in concert with it, currently owns 20.08% of the ordinary shares in issue of the Company. Upon completion of the acquisition, China Times and persons acting in concert with it will be interested in 72.25% of the enlarged share capital of the Company (assuming full conversion of the China Times convertible notes). China Times has been granted a whitewash waiver by the Securities and Futures Commission of Hong Kong and the independent shareholders of the Company have approved the whitewash waiver, from making a mandatory general offer to the shareholders of the Company.

Daye Metal, a non-wholly owned subsidiary of the Parent Company, is principally engaged in the production and sale of copper cathodes, gold and silver. According to the industry report compiled by Beijing Antaike Information Development Co., Ltd., Daye Metal was the fifth largest copper cathodes producer in the PRC by production volume accounting for approximately 6.7% of the total production of copper cathodes in the PRC in 2010. Daye Metal and its subsidiaries (the "Daye Metal Group") is one of the few copper producers in the PRC who have a vertically integrated operation which extends from the exploration, mining and processing of copper ore to the smelting of copper concentrate and the production of copper cathodes and other precious metals such as gold and silver.

For the three years ended 31 December 2010 and the six months ended 30 June 2011, Daye Metal Group achieved revenue of approximately RMB14.9 billion, RMB18.5 billion, RMB26.0 billion and RMB13.7 billion, respectively. Over 70% of its revenue was derived from copper cathodes sales. Sales of associated metals such as gold and silver are also important sources of revenue for Daye Metal Group.

Daye Metal currently holds the mining rights to four mines in the Hubei Province, PRC (being, the Tonglvshan Mine, the Fengshan Mine, the Tongshankou Mine and the Chimashan Mine). All of them have commenced commercial production. According to the competent person's report on the four mines, those mines are estimated to have, in aggregate, ore reserves of approximately 33.89 million tonnes as at 30 September 2011 with an average copper grade of 0.90%. The Tonglvshan Mine also has a rich variety of associated metals, such as gold and silver, in addition to its abundant copper reserves. In the year ended 31 December 2010 and the six months ended 30 June 2011, Daye Metal Group produced, in aggregate, approximately 20,930 tonnes and approximately 9,800 tonnes of copper concentrates from the copper ore mined from the four mines, respectively, which accounted for approximately 13.41% and 13.10% of the copper concentrates used by Daye Metal Group for its copper cathode production in those periods, respectively.

Mr. Zhang Lin, Chairman of the Parent Company, said, "China is by far the world's largest copper cathode consumer. However, the country as a whole does not have sufficient copper resources to support ever-rising domestic consumption, therefore curbing capacity expansion of the copper industry. After the injection of Daye Metal, China Daye will have a significant portfolio of high-grade copper reserves and resources, which will enable us to secure a stable supply of copper concentrates and help reduce our exposure to fluctuations in copper concentrate prices. Moreover, China Daye currently owns the mines such as the Sareke Mine and the Hami Mine in Xinjiang Uygur Autonomous Region of the PRC. We can capitalize on the expertise and experience of the management and technical teams as well as the income stream of Daye Metal for the ongoing development of both Sareke Mine and the Hami Mine and the management of their future operations."

Mr. Zhang Lin added, "After completion of this acquisition, China Daye will continue to expand its portfolio of mining assets by identifying suitable opportunities to acquire new mines and to explore new mineral resources and reserves at the mines currently operated by China Daye and Daye Metal Group. In addition, we have formulated plans to enhance the production capabilities of Daye Metal, including the replacement or upgrade of existing production equipment and the installation of new equipment at its production facilities. We will improve operational efficiency, enhance strategic planning and reduce operating costs through the centralized management of China Daye and Daye Metal. We will also further strengthen our research and development capabilities and production technology. Meanwhile, the board of directors expects that China Daye will actively explore opportunities to acquire or otherwise develop rare earth mining assets as a means of diversifying its business. We are confident that China Daye will grow bigger and stronger under the joint efforts of management and the entire staff, thereby delivering better returns to shareholders."

About the Parent Company

The Parent Company is wholly owned by the State-owned Assets Supervision and Administration Commission of Hubei Provincial People's Government. After years of development, the Parent Company has developed into a state-owned conglomerate with a fully integrated operation which enables it to undertake the different stages of copper production from mining, processing, smelting and plating, research and development, design to sales and trading.

About China Daye

China Daye and its subsidiaries are mainly engaged in exploration, mining and trading of non-ferrous metals.

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SOURCE China Daye Non-Ferrous Metals Mining Limited