· Perilya signs Share Subscription Agreement with major Chinese metals and mining company Shenzhen Zhongjin Lingnan Nonfemet Co. Ltd, to raise A$45,464,560
· Issue price of A$0.23 represents a 53% premium to the last traded price of Perilya on 5 December 2008 and a 61% premium to the volume weighted average price (VWAP) of Perilya shares for the 30 trading days up to 5 December 2008
· Further strengthens Perilya’s balance sheet cash backing and strongly positions Perilya to weather the current commodity price environment and for growth
· Introduces a strong and committed strategic partner to secure the future of Perilya as an independent company
· Zhongjin and Perilya agree to enter into good faith negotiations for potential lead and zinc concentrate off-take sales agreements on commercial and arms-length terms upon expiry of existing agreements
Perilya Limited (ASX:PEM) today announced it has entered into a share placement agreement and strategic partnership with major Chinese metal company Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. (“Zhongjin”), to raise A$45,464,560.
Pending Perilya shareholders’ and regulatory approvals, Zhongjin will subscribe for 197,672,000 fully paid ordinary shares in Perilya at an issue price of A$0.23 per share, to acquire 50.1% of the Company.
Under the agreement, the Perilya Board will be restructured to allow for a new Board with Zhongjin representatives comprising half of the new Board. Paul Arndt will continue as Managing Director and Chief Executive Officer.
Perilya Managing Director, Paul Arndt, said “the agreement represents a watershed event for Perilya and provides a significant platform for growth and a major operational and funding boost for the Company.”
“It also will leave Perilya extremely well placed to withstand the current commodity price environment, and to pursue growth options as they arise.”
“Perilya believes this access to capital provides a significant comparative advantage to other resource companies, and will also allow us to advance, as appropriate, development projects such as the Mount Oxide copper project,” Mr Arndt said.
“Zhongjin is a strong and well funded strategic partner committed to the long-term development of Perilya’s assets. As China’s third largest zinc producer, Zhongjin has a wealth of mining, processing, smelting and marketing experience that will add significant value, particularly through these turbulent times,” he added.
President of Zhongjin, Mr Zhang Shuijian, said that “this represents a good opportunity to invest in the Australian market and support Perilya.”
“Zhongjin is fully supportive of Perilya, its current management team and operating plan. This support will extend to future opportunities for Perilya and its shareholders as they arise.”
Mr Zhang confirmed that Zhongjin do not intend to accept CBH Resources Limited offer for Perilya shares post completion of this transaction.
Perilya Chairman Patrick O’Connor said “a partnership with Zhongjin represents a Company-defining agreement for Perilya and its shareholders and leaves Perilya in a very strong position with no corporate debt and significant cash and investment reserves.”
“The Board is unanimous in the belief that the placement of shares to Zhongjin represents the best alternative currently available to Perilya shareholders, and will be voting their own stock in favour of the Placement”.
“The Board further believes the ability to deliver such a significant transaction against an extremely challenging economic backdrop is testament to both the leadership of Paul Arndt and the strength of Perilya’s asset base,” Mr O’Connor said.
As part of the Placement, Zhongjin will provide Perilya with an initial cash deposit of A$10 million, which is refundable in the event the transaction conditions precedents are either not satisfied or waived.
Zhongjin and Perilya have also agreed to enter into good faith negotiations with respect to potential arm’s length, commercial concentrate sales agreement(s) for a portion of Perilya’s zinc and lead concentrate production which will further support Perilya’s long-term viability.
UBS Investment Bank is acting as financial adviser to Perilya.