Prosperity Minerals Holdings Ltd,which manufactures and sells cement in China, said Monday it has entered into a conditional sale and purchase agreement with Liaoning Yan Zhou Zhu Xing Cement Co. to purchase a 25% equity interest in Liaoning Changqing Cement Co for a consideration of CNY100m (US$14.64m).
Liaoning Changqing, which is presently undergoing production trials for a new cement works, was established as an equity joint venture between Prosperity and the vendor in 2007, holding a 55% and 45% equity interests respectively.
In March 2009, Prosperity and the Vendor signed a revised joint venture agreement in which the equity interest of Prosperity and the Vendor was revised to 75% and 25% respectively.
Prosperity’s 75% equity interest in Liaoning Changqing was transferred to TCC International Ltd on April 30 as part of the disposal of Prosperity’s cement business to TCCI.
The vendor has since approached Prosperity indicating that it wished to sell its 25% interest in Liaoning Changqing because it did not wish to be part of a joint venture with an unfamiliar party.
The directors believe that Prosperity has the opportunity to sell the 25% interest in Liaoning Changqing at a higher valuation following commencement of normal production at the plant.
Liaoning Changqing recently completed construction of a cement and clinker line in Liaoning, China with a production capacity of 2Mt. Trial production commenced on 3 March 2010, the start of normal production is expected in September 2010.