[SMM Analysis] Luoyang Molybdenum Industry further strengthens its say in acquiring IXM Global Cobalt Resources

Headquartered in Geneva, Switzerland, IXM is engaged in the global procurement, mixing, export, transportation and trade of copper, zinc and lead concentrate and crude copper, refined basic metals, and its products are mainly sold to Asia and Europe. IXM has significantly expanded its logistics systems in Peru, Mexico, Taiwan and China, while operating warehouses in Peru, Mexico and Taiwan, and holds minority interests in the nano-Biya logistics system. As one of the world's top mineral traders, IXM has more than 250 employees in 15 countries.

On May 11, 2018, NSR started from Louis Dreyfus Company B.V. The Office acquired its stake in IXM100% and will be restructured prior to the delivery of the transaction so that its stake in IXM100% will be transferred to NSRC.

Earlier, Luoyang Molybdenum Industry passed its holding subsidiaries CMOC Limited, PDK and Freeport-Mcmoran Inc. on May 9, 2016. Sign a share purchase agreement to buy Freeport-Mcmoran DRC Holdings Ltd. held by PDK for $2.65 billion 100% stake. The company has now changed its name to CMOC International DRC Holdings Limited. The company owns 70 per cent of TF Holdings Limited ("TFHL" in Bermuda, while TFHL owns Tenke Fungurume Mining S.A., based in the Democratic Republic of the Congo. ("TFM") 80 per cent.

TFM is engaged in the exploration, mining, processing and marketing of copper and cobalt ores through the Tenke Fungurume copper-cobalt mine ("Tenke") located in the Democratic Republic of the Congo (DRC). The main products are electrolytic copper and cobalt hydroxide primary products. The transaction was completed on November 17, 2016, so that Luo Mo has achieved control of the above-mentioned Democratic Republic of the Congo (DRC) copper and cobalt business, indirectly holding a stake in TFM56%.

The equity relationship between Luoyang Molybdenum and TFM is shown in the following figure:

According to the "Reserve report" provided by Runge Pincock Minarco Limited, the TFM mine has about 24.29 million tons of copper resources and about 2.22 million tons of cobalt resources, with copper production of 204000 tons and cobalt production of 15900 tons in 2015.

In January, more than two years after acquiring a 56 per cent stake in TF M, which owns a premium copper and cobalt mine, Luoyang Molybdenum continued to increase its position, spending about 7.7 billion yuan ($1.136 billion) again to take a 24 per cent stake in the mining company. Further enhance the voice and control of cobalt resources.

SMM believes that the consideration of Luoyang Molybdenum's 500m acquisition of IXM also takes into account the potential synergies between the underlying group's business and the company's existing business. Tenke cobalt production was about 18700 tons in 2018, up 14 per cent from the previous month. With the increase of the rights and interests of Luoyang Mo industry to tenke cobalt ore, the amount of cobalt resources controlled by Luoyang Mo industry has also increased. The acquisition of IXM's global metals division will help to give full play to the synergy between IXM and the existing business of Luoyang Molybdenum Industry, and strengthen the right to consolidate the global cobalt resources supply of Luoyang Molybdenum Industry.

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