Hainan Pearl River Holding plans to form iron ore firm with Beijing Kangtai
Property developer Hainan Pearl River Holding (000505) plans to establish an iron ore company jointly with natural person Gu Lijun and Beijing Kangtai Industry Investment, reports National Business Daily, citing a company filing.
ST Pearl River will invest 64 million yuan for a 40 percent stake, while Gu and Beijing Kangtai will jointly contribute 70 million yuan.
The joint venture will be in charge of the exploration and sale of the iron ore resources at Dujiawan Magnetite Mine and Zhaojiayuan Iron Mine in Hubei province.
Output of iron ore concentrate from the two mines is estimated to hit 450,000 tons per year from the end of 2012.
The Zhaojiayuan Mine has recoverable reserves of 10 million tons of iron ore, with average iron metal grade of 15 percent, while the Dujiawan Mine has recoverable reserves of 40 million tons of iron ore, with average iron metal grade of 15 percent.
Prospecting is underway at the two mines, and permission for exploration is expected to be obtained by April 2012.
The investment will thus not contribute to ST Pearl River's earnings numbers in the next two years.
The iron ore investment is the fourth investment by ST Pearl River year-to-date. It had invested 65 million yuan on the building of railways and coal wholesale markets in January, and it increased its investments in these progects by 80 million yuan in June.
In addition, ST Pearl River had acquired a 40 percent stake in a gas station in Beijing in January for about 50 million yuan.
It signed letters of intent to cooperate with Helongjiang Dahailin Forest Bureau in June to invest at least 1.5 billion yuan over the next 10 years in Xuxiang National Forest Park.
ST Pearl River filed on July 14 that it may record a loss of between 15 million yuan and 25 million yuan in the first half.
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