03/07/2008 - 10:26

FIRB halts Shougang-Prosperity deal

03/07/2008 - 10:26

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The federal government's review of Chinese investment in Australia has denied Perth-based Prosperity Resources Ltd of $4.5 million that it would have received from Shougang Holding.

The federal government's review of Chinese investment in Australia has denied Perth-based Prosperity Resources Ltd of $4.5 million that it would have received from Shougang Holding Ltd.

The Perth company said today that the Chinese entity had not obtained necessary approval from the Foreign Investment Review Board by June 30, causing the subscription agreement signed in May to lapse.

"Current Australian Government policy on foreign investment in the Australian resources sector, especially sovereign entities controlling Australian assets, appears to be under review," Prosperity said.

Under the agreement, Shougang agreed to invest up to 19.9 per cent in Prosperity by subscribing to 30 million shares for 15c each, and the issue 30 million options exercisable at 30c each on or before September 30 this year.

"Whilst this outcome is disappointing that the strategic alliance with Shougang can not occur at this time, the company will now be seeking non-government-owned corporate partners with regards to advancing its iron ore assets," Prosperity managing director Mo Munshi said.

"The company has sufficient cash to continue with its planned 6000m drilling programme at the Tennant Creek Goldfield, commencing this month and progress its other exploration programmes."

Shares in Prosperity shed 2.5c to 11c at 12:30 AEST.

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