Sungreen to buy more metal mining assets

PUBLISHED : Thursday, 14 February, 2008, 12:00am
UPDATED : Thursday, 14 February, 2008, 12:00am

Sungreen International Holdings, a mainland agrochemical manufacturer listed on the Growth Enterprise Market, plans to diversify more into metal mining and related businesses after sealing a HK$892.5 million acquisition last week.

'We may expand both horizontally and vertically by buying more metal mining assets and refining business,' said Eddie Tsang, Sungreen's director of business development. He declined to give details, only stressing that Sungreen is focusing on completing the latest deal.

On February 5, Sungreen said it agreed to pay HK$892.5 million for a 75 per cent stake in Tianbao Mining, which has zinc and lead mines in Wulatezhong Qi, Inner Mongolia.

The deal will be settled mainly by convertible bonds and new shares as well as a cash portion of HK$30 million.

Mr Tsang said Tianbao, which has proven reserves of 31.08 million tonnes of zinc, 10.83 million tonnes of lead and 41.89 million tonnes of sulphur as at the end of 2006, could help broaden Sungreen's core income from organic fertilisers and improve its profitability.

Tianbao reported unaudited post-tax profit of 170.2 million yuan last year. Its seller has guaranteed that this year's after-tax profit will not be less than 200 million yuan.

Sungreen reported a net profit of 6.8 million yuan in the first half of last year.

The mainland is the world's largest producer as well as consumer of zinc and lead, Mr Tsang said.

He predicted increasing profit at Tianbao as the company 'plans to more than double capacity' to meet rising metal demand domestically.

Tianbao plans to invest 150 million yuan to boost its annual ore mining and dressing capacity to 1.02 million tonnes by the end of this year, from 420,000 tonnes at present.

Shares in Sungreen have almost doubled since it announced the acquisition. The stock rose 6.5 per cent to HK$10 yesterday.

The market is speculating that Sungreen will raise funds to capitalise on the recent gain in share price, even though Mr Tsang denied that the company has any such plan 'at this point in time'.