27 Nov 2009 07:00
27 November 2009
Origo Sino-India PLC and Origo Resource Partners Ltd: Investment in Gobi Coal and Energy Ltd
Origo Sino-India PLC ("Origo" or "OSI") and Origo Resource Partners PLC ("ORP") are pleased to announce the acquisition of a 21% stake in Gobi Coal and Energy Ltd ("Gobi" or "the Company") for an aggregate amount of $15 million ("the Acquisition").
OSI has invested $4.5 million for an approximate 6.4 per cent shareholding and ORP has invested $10.5 million for an approximate 14.9 per cent shareholding. Upon completion of the transaction, OSI and ORP's combined shareholding will be the largest equity interest in Gobi.
Gobi has significant high quality coal resources in Mongolia and is competitively positioned to supply fast growing demand from clients in both western and north eastern China. Gobi is a privately owned coal company headquartered in Ulaanbaatar and has successfully raised financing in several rounds with international financial institutions. The Chief Executive and Chairman of Gobi, Mo Munshi, was previously Executive Vice President for Business and Corporate Development at Ivanhoe Mines.
The Company owns two high quality coking and thermal coal deposits (Shinejinst and Zeegt) approximately 133km apart from each other in the south-western Bayanhongor region of Mongolia. The deposits, which have mining licences, contain an aggregate 170 million tonnes of JORC Indicated Resources and 151 million tonnes of JORC Inferred Resources consisting of high calorific value and low sulphur coal with a 60:40 thermal/coking coal split.
Gobi, which is already producing small amounts of coal for local markets, is planning to develop into a significant, low cost open cast producer of thermal and coking coal. Subject to raising further funds, positive outcomes of current and proposed feasibility study work and the receipt of approval for infrastructure investments the Company aims to progressively increase production levels from the Shinejinst and Zeegt deposits. For the year ended 31 December 2008, Gobi made an operating loss of $5.7 million.
Gobi has extensive additional expansion opportunities through its ownership of a number of earlier stage coal projects, as well as a further 20 exploration licences in prospective coal basins in neighbouring areas of Mongolia.
Origo intends to establish representation in Ulaanbaatar following the investment, having already identified a wide variety of China demand driven investment opportunities in sectors such as coal, iron ore, copper, gold and uranium.
The Acquisition has been funded from the respective cash resources of OSI and ORP. Origo will take up a seat on the Board of Gobi and will use its experience in China to assist the Company in becoming a significant provider of coal to the Chinese market.
The recommended merger of OSI and ORP was announced on 16 October 2009 and is subject inter alia to the approval of the shareholders of both companies. It is expected that the merger of OSI and ORP will complete on 14 December 2009.
Commenting on today's announcement Chris Rynning, Chief Executive Officer of OSI and Executive Director of ORP said:
"I am delighted we have been able to identify and complete the investment in Gobi, a company which we believe will become a significant provider of high quality coal to China. We look forward to providing Gobi with the support they need to capture the significant China based growth opportunities available to them.
"Following recent encouraging developments in the Mongolian investment climate, we believe that our investment in Gobi has the potential to deliver considerable value to Origo shareholders. We expect Origo will continue to source similar acquisition opportunities."
Technical Notes and Glossary of Technical Terms
As an unquoted company, Gobi is not subject to the AIM Rules and the information contained in this announcement has not been reviewed by a named "qualified person" as defined and required by the AIM Note for Mining, Oil and Gas Companies.
| "JORC" | The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004 (the "JORC Code" or "the Code"). The Code sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves. The definitions in the JORC Code are either identical to, or not materially different from, those similar codes, guidelines and standards published and adopted by the relevant professional bodies in Australia, Canada, South Africa, USA, UK, Ireland and many countries in Europe. |
| "JORC Inferred Resource"
| that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability. |
| "JORC Indicated Resource" | that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed. |
Further information:
| Origo Sino-India PLC Chris Rynning (chris@origoplc.com) Niklas Ponnert (niklas@origoplc.com)
| +86 1390 124 6417 +86 1351 106 1672 |
| Nominated Adviser to OSI: Smith & Williamson Corporate Finance Limited Azhic Basirov
| +44 (0)20 7131 4000 |
| Nominated Adviser to ORP Westhouse Securities Limited Tim Metcalfe
| +44 (0)20 7601 6100 |
| Broker to OSI and ORP: Liberum Capital Limited Simon Atkinson
| +44 (0)20 3100 2222 |
| Public Relations: Aura Financial Andy Mills / Nina Legge | +44 (0)20 7321 0000 |
With effect from 26 November 2009, ORP's nominated adviser has changed its name from Hanson Westhouse Limited to Westhouse Securities Limited.
Notes to editors:
Origo Sino-India PLC ("Origo") & Origo Resource Partners ("ORP"):
Origo is an established private equity investor and strategic consultancy business, which provides its shareholders with exposure to growth opportunities and private equity returns in China and India.
Origo's business model is to generate capital gains from private equity investment in growth companies from which it also generates fees for consultancy services related to further fundraisings, M&A and strategic development.
Origo signed a memorandum of understanding with GLG Partners LP in March 2008 to explore asset management and advisory opportunities in China, India and other markets.
Origo has a significant portfolio of investments in a range of industrial sectors, including metals and mining, agriculture, renewable energy/clean tech and technology, telecom and media ("TMT").
Origo provides consultancy services to ORP, which invests in private-equity natural resources opportunities in China and India. ORP raised £48.6 million in gross proceeds through an IPO in December 2007.
The recommended merger of OSI and ORP was announced on 16 October 2009 and is subject inter alia to the approval of the shareholders of both companies. It is expected that the merger of OSI and ORP will complete on 14 December 2009
The merger will create a single listed entity benefitting from greater liquidity, scale and efficiencies through which investors can access the predominantly China-linked private equity opportunities identified by Origo's management team.