Huayou gets nod to takeover Prospect Resources

Huayou International Mining which is poised to acquire Prospect Resources Limited has received Chinese regulatory approvals for the acquisition, Business Weekly can report.

In an update released Tuesday, Prospect said it had been notified by Huayou that the later had obtained the outbound investment certificate for the Transaction from the Ministry of Commerce of the People’s Republic of China (MOFCOM) required for completion of the Transaction.

Application for filing and registration by the National Development and Reform Commission (NDRC) has also been submitted by Huayou.

“Once completing the filing and registration by NDRC, Huayou will apply for the relevant exchange registrations from a qualified bank supervised by the State Administration of Foreign Exchange (SAFE) and these confirmations are expected to be received in due course,” reads part of Prospect’s update.

The transaction in question is for the sale of Prospect’s 87 percent interest in the Arcadia Lithium Project (Arcadia) and associated intercompany loan to a subsidiary of new energy lithium-ion battery material producer, Zhejiang Huayou Cobalt Co., Limited (Huayou), for approximately US$377.8 million (A$528.4 million) in upfront cash consideration.

With Huayou coming in as a major shareholder it has also meant some offtake agreements Prospect had signed will have to be revised.

One of the offtake agreements is with Sinomine Resource (Hong Kong) with respect to the offtake and marketing arrangements.

“The effect will be that the Offtake Agreement is terminated and Prospect, PLZ and Sinomine are released from their respective obligations, and Sinomine will receive an amount of US$8 million as required under the Termination Deed.

“The terms of the Termination Deed only take effect in the event of completion of the Transaction. If the Transaction is not completed, the terms of the Termination Deed do not take effect, and the status quo prevails.”-eBusiness Weekly