Jul 28 2010
New Pacific Metals Corp. (TSX VENTURE:NUX) ("New Pacific") announces that its sole subsidiary company has signed a share transfer and cooperation framework agreement (the "Agreement") with a Chinese gold investment company, the PGC Group Co. Ltd.
According to the Agreement, New Pacific will transfer its 100% interest in Jin Chang Jiang Mining Co. Ltd. ("JCJM"), a wholly owned foreign enterprise in China, to the PGC Group for $30.5 million. JCJM's main assets are the XSK and HNK gold-polymetallic projects in Guangdong, China. The PGC Group is a Chinese government controlled enterprise located in Shandong province. The PGC's total assets were about $339 million by the end of 2009 and its sales revenue was about $150 million in 2009.
Pursuant to the Agreement, the PGC will first purchase a 60% interest of JCJM for $15.25 million in three instalments: 1) first payment of $3.05 million within 5 business days after signing the Agreement; 2) second payment of $4,575,000 within 25 business days after required due diligent documents are provided to the PGC Group; and 3) third payment of $7,625,000 within 5 business days after the 60% interest being officially transferred to the PGC Group, as evidenced by a new business license issued by Chinese government authorities. After the first purchase, JCJM will become a 60%/40% joint venture between the PGC Group and New Pacific.
The PGC Group will purchase the remaining 40% interest from New Pacific for $15.25 million within 24 months after signing the Agreement. The consideration for the payment will be through the issuance of shares of a subsidiary of the PGC Group. The subsidiary is in the process of applying for an initial public offering ("IPO") or reverse take-over ("RTO") on one of the Chinese stock exchanges. In the event that the subsidiary of the PGC Group fails to be listed through IPO or RTO, or if it does not wish to issue shares to New Pacific, then the PGC Group agrees that it will make a cash payment of $15.25 million to New Pacific for the remaining 40% interest.
New Pacific has agreed to pay a finder's fee of 6% for the first $15.25 million payment and 5% for the second $15.25 million payment.
The completion of the whole transaction is subject to government and regulatory authorities approval.