Trading in Yunnan Tin Company shares on the Shenzhen stock exchange resumed after a three month suspension yesterday, following the announcement of an asset re-organisation which saw it take a 75.74% equity stake in Yunnan Huanlian Zinc & Indium and simultaneously dispose of its loss-making lead smelter. This will boost YTC’s profitability and add substantially to its reserves of tin, zinc and indium.
Yunnan Huanlian has seen rising profits in recent years and is expected to make a net profit of some RMB 430 million yuan (US$70 million) in 2014, up from RMB 287 million last year. The acquisition is valued at RMB 3.74 billion yuan (US$605 million) via a private share placement to Yunnan Hualian’s shareholders, including Yunnan Tin Group, Yunnan Tin Holding Co. and Tianjin Boxin at a price of 11.80 yuan/share.
Meanwhile, Yunnan Tin will sell its unprofitable lead asset to Yunnan Tin Holding Co. to obtain RMB 1.391 billion yuan (US$225 million) in cash. The lead smelter was built at a cost of RMB 1.263 billion yuan and started production in April 2011. It adopted Ausmelt technology and has an annual capacity of 100,000 tonnes, but was unable to operate at full capacity due to a shortage of raw materials and made substantial losses as lead prices fell. Production is currently suspended.
The changes have been authorized by SASAC (State-owned Assets Supervision and Administration Commission) and now awaiting approval at YTC’s 2014 first provisional shareholders meeting.
