SHANGHAI, Mar. 23 (SMM) - China-Kinwa High Technology (China-Kinwa) gained its 10% daily limit for six straight days following news that it will acquire Dechang Houdi Rare Earth Mineral Industry (Houdi Rare Earth).
According to China-Kinwa’s annual report, the company reported RMB 1.53 billion in operating revenues during the report period, up 24% YoY. Profits attributable to its parent company hit RMB 5.23 million, with earnings per share at RMB 0.0045.
Houdi Rare Earth Is Now Closed for Maintenance
On March 11, China-Kinwa announced that it plans to issue not more than RMB 650 million worth of shares to eight specified objects at RMB 3.65 per share in a bid to raise approximately RMB 2.37 billion. Of these, no more than RMB 1.69 billion will be used to acquire 100% stakes at Houdi Rare Earth, while the remaining funds will be used as working capital.
After the announcement, China-Kinwa’s share prices rose to the 10% daily limit for a sixth straight day to close at RMB 6.11 per share on March 19. However, it was argued that the price on the acquisition was exorbitant and that continent slot rare earth reserves are still unknown.
China-Kinwa issued a notice in response to media concerns. According to the notice, Xichang Zhineng Industry, a wholly-owned subsidiary of Houdi Rare Earth, is in the process of filing newly-added reserves. A geological team with industry qualifications has issued geological report and evaluation papers, which have been submitted to the Land and Resource Department of Sichuan Province. The acquisition price is the highest price agreed by Chengdu Guangdi Green Project Develop following the filing of newly-added reserves. The final acquisition price will be subject to the evaluation report and examination result.
In response to reports that Houdi Rare Earth’s mining control indicator on continent slot rare earth is inconsistent with the data announced by the local government, China-Kinwa said Xichang Zhineng Industry’s mining control indicator of continent slot rare earth in 2011 and 2012 was 2,880 mt and 2,300 mt, respectively. Chengdu Guangdi Green Project Develop is urging Houdi Rare Earth to expand capacity so as to fulfill its mining target for this year.
China-Kinwa said Houdi Rare earth has been closed for maintenance since March this year and is scheduled to resume production before April 2013.
RMB 1.9 billion in Revenues Is Expected
China-Kinwa expanded output and sales of copper foil during the report period. The company reported an increase in revenues and profits from copper foil, wire and cable and battery material business. On the other hand, the company’s management costs declined on a yearly basis.
The company anticipates RMB 1.9 billion in revenues in 2013.
China-Kinwa said it will continue to buy assets via private placement this year. Once it successfully acquires Houdi Rare Earth, the company will develop Houdi Rare Earth into a rare earth mining and deep processing company,