Baosteel seals minority stake deal in Noront
By Richard Fu |
May 4, 2011, Wednesday
|
Print Edition
Print Edition
BAOSTEEL Group Corp has agreed to buy a minority stake in Canada's Noront Resources Ltd for up to C$29.1 million (US$30.7 million), and the deal will give the Shanghai-based steel mill access to metals, including nickel, used in stainless steel production.
Baosteel will pay C$17.4 million, or 86 Canadian cents per unit consisting of one share and 50 percent of one share purchase warrant, Toronto-based Noront said in a statement on Monday.
The private share placement will give Baosteel a 9.9 percent stake in Noront. The exercise price of each warrant was set at C$1.16 for a period of two years, and exercising the warrants fully would raise Baosteel's stake to 14.15 percent with Noront getting the remaining C$11.7 million.
"Baosteel's intended investment represents the initial step in a potential long-term partnership that provides Noront with access to one of China's largest steel producers and China's rapidly expanding stainless steel industry," Wes Hanson, president and CEO of Noront, said in the statement.
The placement also allows Baosteel to lift its stake in Noront to 19.9 percent over one year from April 18, 2012.
Baosteel will focus on the quality of its stainless steel products and controlling raw material costs, Ma Guoqiang, general manager of its listed unit Baoshan Iron and Steel Co, said yesterday during an online session with investors.
Baosteel is the second-largest shareholder of Shanxi Taigang Stainless Steel Co, China's biggest producer of the rust-proof metal.
Noront said it will use the proceeds to fund feasibility studies at two of its fields.
The placement is pending approval by various authorities. Noront said the deal may be finalized next month.
Baosteel will pay C$17.4 million, or 86 Canadian cents per unit consisting of one share and 50 percent of one share purchase warrant, Toronto-based Noront said in a statement on Monday.
The private share placement will give Baosteel a 9.9 percent stake in Noront. The exercise price of each warrant was set at C$1.16 for a period of two years, and exercising the warrants fully would raise Baosteel's stake to 14.15 percent with Noront getting the remaining C$11.7 million.
"Baosteel's intended investment represents the initial step in a potential long-term partnership that provides Noront with access to one of China's largest steel producers and China's rapidly expanding stainless steel industry," Wes Hanson, president and CEO of Noront, said in the statement.
The placement also allows Baosteel to lift its stake in Noront to 19.9 percent over one year from April 18, 2012.
Baosteel will focus on the quality of its stainless steel products and controlling raw material costs, Ma Guoqiang, general manager of its listed unit Baoshan Iron and Steel Co, said yesterday during an online session with investors.
Baosteel is the second-largest shareholder of Shanxi Taigang Stainless Steel Co, China's biggest producer of the rust-proof metal.
Noront said it will use the proceeds to fund feasibility studies at two of its fields.
The placement is pending approval by various authorities. Noront said the deal may be finalized next month.
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