05/05/2008 - 10:31

Shougang to take major stake in Prosperity

05/05/2008 - 10:31

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Chinese steel company Shougang Corporation has agreed to invest up to 19.9 per cent in Perth-based Prosperity Resources Ltd via a share placement.

Chinese steel company Shougang Corporation has agreed to invest up to 19.9 per cent in Perth-based Prosperity Resources Ltd via a share placement.

The investment is the latest in a string of Chinese companies taking strategic stakes in up and coming resource companies in the Mid West region of Western Australia.

Prosperity holds interests in the Paynes Find and Mt Gibson project areas which are prospective for iron and gold.

The overall placement is a combination of options and shares, with the latter priced at 15c apiece to raise $4.5 million through the issue of 30 million shares.

Full announcement below:

Prosperity Resources Limited has reached agreement with Shougang Holding (Hong Kong) Limited ("Shougang") to a placement of securities in Prosperity Resources Ltd ("Prosperity Resources"). Chairman, Mr Mo Munshi said "We are delighted to have attracted Shougang to be a strategic partner, one of the largest of several Chinese steel mills seeking to make a significant investment in the Mid West of Western Australia."
It is proposed that subject to certain conditions precedent, the transaction would involve:
- Shougang participating in the issue and placement of 30,000,000 Shares at an issue
price of 15 cents each to raise $A4.5m ("Placement Shares"); and
- Prosperity Resources granting to Shougang up to a maximum of 30,000,000 Options
at an exercise price of 30 cents each and exercisable on or before 30 September 2008
("Placement Options"). The number of Placement Options to be issued will be such
number which, when combined with the Placement Shares, will equate to 19.9% of the
issued share capital of Prosperity Resources at the time of issue of the Placement
Options.
Accordingly, following the issue of the Placement Shares and assuming all of the Placement
Options are exercised Shougang would hold approximately 19.9% of the issued share capital
of Prosperity Resources.
The proposed issue of Placement Shares and Placement Options as outlined above will also be subject to Prosperity obtaining any necessary shareholder approvals.
The proposed issue of Placement Shares and Placement Options as outlined above will also be subject to Shougang conducting a legal and technical due diligence by the 16 May 2008 and obtaining Foreign Investment Review Board approval.
Following the issue of the Placement Shares, a representative of Shougang will be appointed
to the board of Prosperity Resources ("Board") and, subject to the exercise of all of the
Placement Options, a further representative of Shougang will be appointed to the Board.

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