AsiaPhos to acquire China resource group for $36.8m

AsiaPhos CEO Dr Ong Hian Eng.
AsiaPhos CEO Dr Ong Hian Eng. PHOTO: ST FILE

SINGAPORE - Catalist-listed mineral resource group AsiaPhos announced on Monday that it will acquire the entire issued and paid-up capital of LY Resources (LYR Group) for $36.8 million from Mr Luo Yong, who owns half of the equity interest in Mianzhu Dashan Mining Co Ltd (Dashan), the group's cooperation partner in China.

AsiaPhos said the acquisition will allow it to acquire the economic benefits of an existing cooperation arrangement presently accruing to its partner Dashan.

It will also facilitate the ownership of a 55 per cent equity interest in Deyang Fengtai Mining Co Ltd, a company incorporated in China, which holds the FengTai licence - an exploration licence for barite rocks in an area situated in the vicinity of the group's existing mines in China's Sichuan province.

AsiaPhos CEO Dr Ong Hian Eng said the LYR acquisition will improve the group's operating cash flows as Dashan's share of profits from the cooperation arrangement which are recognised as AsiaPhos' production costs need not be payable to Dashan after the completion of the transaction.

"The FengTai Licence offers the potential to increase our resource base," he said. "We believe that there will be potential economies of scale, operational synergies and cost savings from being close to our production facilities. While we have been steadily increasing our mining output over the past few years, having an enlarged resource base will help sustain output growth over the longer term."

The acquisition follows an independent valuation report by Jones Lang LaSalle on June 26, 2015, which valued LYR Group at 266.58 million yuan (S$57.56 million).