8 Apr 2010 14:42

Huaxi Steel buys stake in Australian miner

Shanghai. April 8. INTERFAX-CHINA - China's Jiangyin Huaxi Iron and Steel Co. Ltd. intends to acquire a 13 percent stake in Australian Securities Exchange-listed Lincoln Minerals Ltd. for AUD 8.25 million ($7.66 million), which would make it the company's second largest shareholder, Lincoln Minerals announced on April 7.

According to the announcement, Huaxi Steel has already invested AUD 825,000 ($765,930) for 1.5 million Lincoln Minerals shares at a per-share price of AUD 0.55 ($0.51). The remainder will be paid at a later date in exchange for a further 13.5 million shares.

Meanwhile, under the terms of the agreement, Huaxi will buy at least half of the iron ore output from Lincoln Mineral's Gum Flat Iron Ore Project per annum for a minimum of two years, with the option of a further three-year extension. The project, located in southern Australia, has between 125 million and 200 million tons of magnetite ore, and up to 17 million tons of hematite ore.

Lincoln Minerals, which holds a 60 percent stake in the Gum Flat iron ore project, also announced that they intend to the buy the remaining 40 percent of the project for AUD 5.7 million ($5.29 million) from Indian iron ore miner Mineral Enterprises Ltd. The sale is due to be completed by the end of April.

Huaxi Steel, which is located in Jiangyin City, Jiangsu Province, has an annual production capacity of 1.85 million tons of sinter, 500,000 tons of pellet, 1.25 million tons of molten iron and 1.25 million tons of continuous cast billet. It produced 3.09 million tons of crude steel in 2009. The company also holds an iron ore import license.

Lincoln Minerals is a mineral resources developer with various projects in Indonesia and South Australia. These include the Cockabidnie Nickel Project, the Wilcherry Uranium Project, the Lake Torrens Project, which contains iron ore, copper and gold resources, and the Gum Flat Iron Ore Project.