Molybdenum acquires copper and cobalt business -Lithium - Ion Battery Equipment

Molybdenum acquires copper and cobalt business -Lithium - Ion Battery Equipment

Recently, China Molybdenum (03993) announced that the company had received notices from the South African Competition Commission and the Bermuda Financial Authority respectively, both of which had unconditionally approved the company's acquisition of the Tenke copper-cobalt ore project under Freeport Group, according to which the company could perform the acquisition.

On the evening of May 15th, China Molybdenum announced its restructuring plan, and planned to purchase 100% of FMDRC's shares in FCX's FMDRC from pDK in cash through its Hong Kong subsidiary CMOCLimited. After the transaction is completed, the company will indirectly hold a 100% stake in FMDRC, thereby obtaining a 56% stake in TFM. The deal was valued at $2.65 billion.

The editor has learned that the essence of this transaction is to achieve control over TFM through the acquisition of the above-mentioned transaction targets.

It is understood that the full name of FCX is Freeport Macmillan Corporation, a company listed on the New York Stock Exchange. As of May 11, 2016, FCX, with a market value of US$13.6 billion, is the world's largest listed copper company with its headquarters in Phoenix, Arizona, USA. According to the "2015 Global Mining Report" (Mine2015) published by PricewaterhouseCoopers, FCX ranks ninth among the world's top 40 listed mining companies.(Lithium - Ion Battery Equipment)

CMOC's acquisition target, FMDRC, is a wholly-owned subsidiary indirectly controlled by FCX. FMDRC indirectly holds a 56% stake in TFM located in the Democratic Republic of the Congo. The Tenke Fungurume mine owned by TFM is one of the copper and cobalt mines with the largest reserves and the highest grade in the world, and it is also the largest foreign investment project in the Democratic Republic of the Congo.

The announcement shows that TFM is engaged in the mining and processing of copper and cobalt. According to the company, at present, the proven economic reserves of copper and cobalt in the Tenke Fungurume mining area are 3.76 million tons and 510,000 tons respectively. Based on the current mining scale, the service life of its economic reserves is about 25 years. In addition, the proven and controlled copper and cobalt resources (excluding economic reserves) in this mining area are 13.098 million tons and 1.322 million tons respectively, with huge potential for future development.

CMOC said that after the completion of the acquisition, the company's copper business will be strengthened and become an important copper production company in the world; With the rapid development of lithium-ion batteries and super alloys, the cobalt business will become an important profit growth point for the company.

The consideration for this transaction will be paid in US dollars in cash and does not involve the issuance of shares. Therefore, this transaction will not affect the equity structure of CMOC. Some of these funds are intended to be raised through financing.

It is reported that CMOC is currently one of the world's leading molybdenum producers with three expert-level molybdenum mines and one of the largest tungsten producers in my country. In 2013, China Molybdenum acquired an 80% stake in the Northparkes copper-gold mine in Australia from Rio Tintop LC for about US$800 million, and initially acquired relevant experience in operating large-scale overseas copper mines.



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