Not participating in debate atm trying to fathom stuffHere's a...

Not participating in debate atm trying to fathom stuff
Here's a but from the horse's mouth

HNC update to Hong Kong exchange re cmr
http://www.hkexnews.hk/listedco/listconews/sehk/20090503/LTN20090503015.pdf


Hunan Nonferrous Metals Corporation Limited*
ºþÄÏÓÐÉ«½ðŒÙ¹É·ÝÓÐÏÞ¹«Ë¾
(a joint stock limited company incorporated in the People¡¯s Republic of China with limited liability)
(Stock Code: 2626)
ANNOUNCEMENT
Background
Reference is made to the announcement of Hunan Nonferrous Metals Corporation Limited (the
¡°Company¡±, together with its subsidiaries, the ¡°Group¡±) dated 30 January 2009 (the
¡°Announcement¡±) regarding the appointment of voluntary administrators of Compass
Resources Limited (¡°CMR¡±).
Unless otherwise defined, capitalized terms used herein shall have the same meaning as
contained in the Announcement.
Whilst CMR is not a subsidiary of the Company, the Company currently holds approximately
4.52% shares of the total issued share capital of CMR and the convertible note of US$10
million which may be converted into shares of CMR at AUD 0.42 per share, using an
AUD/USD exchange rate of AUD0.6568 subject to approvals of the relevant regulatory
authorities and CMR¡¯s shareholders.
In 2007, the Group and CMR formed three unincorporated joint ventures namely, the base
metals oxide joint venture, base metals sulfide joint venture and regional exploration joint
venture for the development of base metals oxide and sulfide resources of CMR¡¯s tenements
located in Australia. Each of the Group and CMR has a share of 50% interest in the three
joint ventures. The base metals oxide joint venture is under trial production and the operator
of the joint venture is in process of rectifying production design issues identified to date in
order to achieve required performance standards. The base metals sulfide joint venture has
basically completed the exploration stage and feasibility study of the related production plant
construction is now underway. The regional exploration joint venture is established for the
purpose of identifying new areas within CMR¡¯s tenements for the exploration of mineral
resources, and such new area exploration activities have been tentatively stopped since the
end of 2008 due to the relevant market downturn.
As at 31 December 2008, the Group¡¯s assets invested in the above-mentioned joint ventures
are as follows:
CMR has failed to meet its commitment to fund its share of the operating expenditure of the
joint ventures. Furthermore, the shares of CMR listed in Australia have been suspended
from trading since January 2009 and CMR has entered into voluntary receivership since
February 2009. The above events have caused significant doubts over the progress of the
developments and operations of, and hence, the Group¡¯s investments in, the joint venture
projects.
Further Update
In this connection, the board of directors (the ¡°Board¡±) of the Company would like to update
the shareholders that on 30 April 2009, CMR convened the second meeting of creditors of
CMR. For our own interest, the Company has abstained from voting. It is noted that in such
creditors¡¯ meeting, the Holding Deed of Corporate Agreement proposed by CMR¡¯s directors
has been approved and CMR will continue to subsist under the administration of the deed
administrator in the next 12 months.
On 30 April 2009, Compass Mining, a subsidiary of the CMR and the operator of two joint
venture projects formed by the Group and CMR, convened the second meeting of creditors of
Compass Mining. It was resolved at such creditors¡¯meeting that Compass Mining would go
into bankruptcy proceedings. As a result, Compass Mining, the original project operator of
2008 2007
RMB ¡®000 RMB ¡®000
Property, plant and equipment 350,980 407,554
Exploration and evaluation assets
Prepayments
127,317
49,079
-
-
527,376 407,554
oxidized mines and sulphide mines, would go into bankruptcy. As the new operator, 'HNC
(Australia) Resources Pty Ltd ( ºþÄÏÓÐÉ«£¨°Ä´óÀû�†£©ÙYÔ´ÓÐÏÞ¹«Ë¾), a wholly-owned
subsidiary of the Company, will undertake the operation of the oxidized mines, sulphide
mines and regional survey projects thereafter. The Company believe that (i) save for the
replacement of the operator, the relationship between the project partners has not been
subjected to any material changes and shall subsist; (ii) pursuant to the cooperation
agreement, the partners are entitled to their respective share of interests in the projects and are
liable for any relevant obligations to be performed thereof; and (iii) the terms under the
cooperation agreement remain to be binding on both parties.
Given the above developments in CMR, the Group have been considering and taking
measures with an objective of ensuring resumption of normal operation of the joint venture
projects. However, the final outcome of the measures is uncertain. The Company will keep
its shareholders and the public informed should there is any progress of the above and make
further announcement if and when appropriate.
This announcement is made by the Company pursuant to Rule 13.09(1) of the Rules
Governing the Listing of Securities on the Hong Kong Stock Exchange (the ¡°Listing Rules¡±).
Shareholders of the Company and potential investors are advised to exercise caution when
dealing in the shares of the Company.
By Order of the Board
Hunan Nonferrous Metals
Corporation Limited*
He Renchun
Chairman