NWS revives mine spin-off plan

NWS Holdings will revive the proposed spin-off of its mainland iron ore mine, just three months after the Hong Kong stock exchange listing committee rejected its application.

Newton Resources, in which NWS has a 60 per cent stake, owns and operates the iron ore mine in Hebei. It plans to raise as much as US$700 million through selling 1.2 billion shares, according to the term sheet.

The offering may include a preferential offering to New World Development and NWS shareholders, according to a joint statement issued by the two companies. New World holds 40 per cent of NWS. The stock exchange rejected the spin-off of the mine in February and the company did not disclose the exchange's reasons for rejecting the application.

The main asset of Newton Resources is the Yanjiazhuang Mine, which occupies a mining area of about 5.22 square kilometres.

Newton Resources said in its drafted listing prospectus that the Yanjiazhuang Mine had proved and probable reserves of about 260 tonnes, which were converted from the total measured and indicated iron ore resources of about 311.8 tonnes as at December last year.

'We [Newton Resources] use open-pit mining to extract our reserves. Open-pit mining is characterised by shorter timeframes for mine infrastructure construction, lower capital expenditure requirements and a relatively simple iron ore extraction process,' it said.

To increase processing capacity to 10.5 million tonnes per year by November 2012, Newton Resources expects an estimated capital outlay of 897 million yuan (HK$1.08 billion) in a three-phase expansion plan.