ONFEM Holdings plans to pass up interest of 18 per cent plus surplus interest of 10 per cent on a yuan-denominated loan to Huatong Copper Ore, a subsidiary of ONFEM's parent China National Non-ferrous Metals Industry Corp (CNNC), and proposes instead to exercise an option to invest in Huatong's mines in China.
ONFEM, an indirect subsidiary of CNNC, which also indirectly controls Huatong, will inject 18.38 million yuan (about HK$16.41 million) into the venture for a 51 per cent share. It is already owed some 10.59 million yuan in loans and accrued but unpaid interest.
Huatong will inject 4.9 million yuan in cash and 12.76 million yuan in equipment, mine shafts and ore extraction facilities.
Part of ONFEM's contribution will be made by netting out of the 10.59 million yuan already owed from loans made in January and April.
Most of Huatong's assets are in the form of its existing mines which have reserves of copper and some gold and silver, according to ONFEM.
The mines' output and profit forecast have been examined in a diligent procedure by Central Engineering & Research Institute for Non-ferrous Metallurgical Industries (ENFI), which is controlled by CNNC, by Moores Rowland, ONFEM's auditors.