Kiu Hung to acquire Inner Mongolia coal mines for HK$840m

Toymaker Kiu Hung International Holdings yesterday announced it would pay HK$840 million for two coal mines in Inner Mongolia, sending its shares up as much as 35.43 per cent as they resumed trade.

The two mines, which have combined coal reserves of more than 305 million tonnes, would boost the firm's reserves to more than 400 million tonnes, chairman Joseph Hui Kee-fung said.

Kiu Hung, which bought a coal mine in Inner Mongolia in April, needed to invest an additional HK$620 million to prepare the three mines to begin operations next year, Mr Hui said.

To fund the investments, Kiu Hung may place shares or sell convertible bonds. Such a move would dilute the stake held by Mr Hui's family, although it would still be the biggest shareholder, he said.

The Hui family's stake fell to 47 per cent from 52 per cent in April when the company issued new shares to partly fund the mine purchase. Its stake will fall to 37 per cent after the latest acquisition.

Shares in Kiu Hung traded as high as HK$1.72 yesterday before closing up 21.26 per cent at HK$1.54. The stock has risen 79 per cent in the past three months.