19/08/2009 - 11:10

Tianshan sells Chinese gold interests

19/08/2009 - 11:10


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Gold exploration company Tianshan Goldfields has agreed to sell all of its Chinese assets to Hong Kong-based company China Power Sino Renewable Resources for $US22.5M.

Tianshan sells Chinese gold interests

Gold exploration company Tianshan Goldfields has agreed to sell all of its Chinese assets to Hong Kong-based company China Power Sino Renewable Resources for $US22.5M.

As part of the deal, China Power Sino has paid a $US1 million deposit to Tiashan and will carry out due diligence on the assets in question, which will be completed in 60 days.

The sale is also subject to shareholder approval.




Full announcement below:




- Tianshan Goldfields signs agreement with Hong Kong company to sell Chinese gold assets for USD$22.5M
- Tianshan receives USD$1M deposit
- 60 day due diligence period underway
- Post transaction Tianshan will have a cash position in excess of AUD$35M and be well placed to take advantage of a range of undervalued opportunities.

Australian based gold company Tianshan Goldfields Limited (ASX: TGF) ("Tianshan" or "the company") has reached conditional agreement to sell its entire portfolio of Chinese assets to Hong Kong registered company China Power Sino Renewable Resources Ltd ("Sino Power") for USD$22.5M.

Under the terms of the Memorandum of Understanding (MoU) between the parties Sino Power has paid a deposit of USD$1M to Tianshan and commenced further due diligence on the assets. This due diligence, which is a condition to the sale, will be completed within 6o days. The sale is also subject to shareholder approval.

Tianshan has since listing been focussed on the development of its main Chinese asset, its 90%-owned Gold Mountain Project, located in North West China. The Project comprises 11 Exploration Licences in the Tulasi Basin covering a combined total area of 576 square kilometres.

The company has been targeting the completion of a Full Feasibility Study in 2009 and production from 2010 of approximately 65,000 ounces per annum, subject to receipt of relevant approvals from Chinese government authorities.

Tianshan has made the decision to sell its Chinese portfolio based on a review of its assets and future strategy by the current board in recent months. This review determined the company could, on balance, maximise returns to the company and its shareholders if it was able to execute a full (or partial) sale of its Chinese assets and use the funds raised to acquire interests in other companies or projects, some of which have been identified by the company.

"The global credit crisis has generated a range of opportunities for companies that have a strong technical team and a considerable cash backing," said Tianshan Goldfields Managing Director Mr Jason Bontempo.

"Following the detailed review of the company and its assets the board determined that if we were able to sell some or all of our Chinese portfolio for a suitable amount Tianshan would be able to acquire companies or assets that in our view are significantly undervalued.

Tianshan has identified a range of opportunities at both the project and company level that it believes can return significant value to the company and its shareholders in a more suitable time-frame. Once the transaction with Sino Power is completed these negotiations will be pursued.

"We believe the price we have achieved for our Chinese portfolio is significantly higher than the enterprise value by the equity market and are confident that the sale proceeds will be applied to an acquisition or acquisitions that will add significant value to the company and its shareholders," Mr Bontempo added.

Post the transaction Tianshan will have cash reserves in excess of AUD$35M (using USD $0.80c exchange rate).

The transaction is subject to:

Successful completion of the due diligence period,
Tianshan Goldfields board and shareholder approval,
Receipt of necessary government and regulatory approvals.
The deposit shall be fully refundable should the shareholders not approve the transaction and vote to develop the project internally for the next 5 years. Notwithstanding this, Tianshan shall pay USD5,000,000 to Sino Power as compensation if the contemplated sale does not proceed for any other reason than to develop the project.

The parties will now proceed to negotiate and enter into a definitive sales and purchase agreement by 20 October 2009.

A notice of meeting is currently being prepared and will be forwarded to shareholders in due course

Huashan Capital, a Shanghai China based advisory and investment firm specialised in the mining and resources industry, acted as the advisor on the transaction.


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