b90339b1-1b9e-4d0b-9e26-eaaa476f4ed4.pdf
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness, and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
CONNECTED TRANSACTIONS
JOINT OPERATION OF MAOCHANG MINE WITH CHINALCO AND ACQUISITION OF CERTAIN INCOME SHARING RIGHTS OF
MAOCHANG MINE
The Board of the Company hereby announces that, on 28 June 2016, the Company entered into a Cooperative Exploration Agreement with Chinalco, pursuant to which the Company will jointly operate Maochang Mine with Chinalco and hold 58.15% of the Income Sharing Rights thereof. On the same day, the Company entered into an Income Sharing Rights Transfer Agreement with Chinalco, pursuant to which the Company will acquire 80% of Chinalco's Income Sharing Rights in Maochang Mine. Upon completion of the transactions under the Cooperative Exploration Agreement and the Income Sharing Rights Transfer Agreement, the Company will hold 91.63% of the Income Sharing Rights of Maochang Mine.
As at the date of this announcement, Chinalco is the substantial Shareholder of the Company and therefore is a connected person of the Company, and the transactions under the Cooperative Exploration Agreement and the Income Sharing Rights Transfer Agreement in aggregate constitute connected transactions of the Company. As the highest applicable percentage ratio (as defined in the Hong Kong Listing Rules), calculated on an aggregated basis, in respect of the connected transactions exceeds 0.1% but is less than 5%, pursuant to Chapter 14A of the Hong Kong Listing Rules, the connected transactions are subject to the reporting and announcement requirements, but exempt from the independent shareholders' approval requirement under Chapter 14A of the Hong Kong Listing Rules.
INTRODUCTION
The Board of Aluminum Corporation of China Limited* (the "Company") hereby announces that on 28 June 2016, the Company entered into a Cooperative Exploration Agreement with Chinalco, pursuant to which the Company will jointly operate Maochang Mine with Chinalco and hold 58.15% of the Income Sharing Rights thereof. On the same day, the Company entered into an Income Sharing Rights Transfer Agreement with Chinalco, pursuant to which the Company will acquire 80% of Chinalco's Income Sharing Rights in Maochang Mine. Upon completion of the transactions under the Cooperative Exploration Agreement and the Income Sharing Rights Transfer Agreement, the Company will hold 91.63% of the Income Sharing Rights of Maochang Mine.
COOPERATIVE EXPLORATION AGREEMENT
Date
28 June 2016
Parties
-
The Company; and
-
Chinalco.
Term of joint operation
From 1 July 2016 to 30 December 2038
Way of cooperation and ratio of contribution
The main resource of Maochang Mine is bauxite resource. Chinalco owns the Mining Right of Maochang Mine. In accordance with the valuation report issued by Chongqing Hourun in relation to the Mining Right, as at the Valuation Base Date, the appraised value of the said Mining Right was RMB475 million. Guizhou branch of the Company commenced construction of Maochang Mine in 2011. As at 31 March 2016 (as the base date), the carrying value for construction investment of the Company in the Maochang Mine amounted to RMB660 million.
Chinalco and the Company propose to make contributions with Mining Right (representing approximately 41.85% of the total contribution to Maochang Mine) and construction investment (representing approximately 58.15% of the total contribution to Maochang Mine), respectively, and adopt the way of cooperative exploration for the operation of Maochang Mine during the term of joint operation.
The amounts and ratios of contribution (subject to adjustment according to the appraised value of fixed asset of Maochang Mine which is expected to be capitalized from the current construction in progress) are determined by both parties after arm's length negotiations with reference to the appraised value of Chinalco's Mining Right as at the Valuation Base Date as set out in the valuation report issued by Chongqing Hourun in relation to the Mining Right and the carrying amount of the Company's construction investment as at the Valuation Base Date.
During the term of cooperative operation, Chinalco will be responsible for the maintenance of Mining Right and resolution of relevant issues, while the Company will be responsible for construction investment and daily operation of Maochang Mine. Both parties shall share operating costs and operating income and undertake operational risks to the extent of their respective ratio of contribution.
Income sharing
Based on both parties' ratios of contribution, during the term of cooperative operation, Chinalco and the Company are entitled to 41.85% and 58.15% of the income of Maochang Mine, respectively.
Taxes
During the term of cooperative operation, all the taxes incurred from mining and operation of Maochang Mine shall be borne by the subject as specified by laws and regulations or by both parties on a pro-rata basis in case of no responsible subject under laws and regulations.
Representations and warranties
Chinalco undertakes that it owns the legitimate Mining Right of Maochang Mine. Chinalco warrants that the Mining Right and relevant interests are free from any mortgage, pledge or guarantee and are not leased to any third party; otherwise, Chinalco shall assume all the consequences resulting therefrom.
INCOME SHARING RIGHTS TRANSFER AGREEMENT
Date
28 June 2016
Parties
-
the Company; and
-
Chinalco.
Subject matter
Chinalco will transfer 80% of its Income Sharing Rights under the Cooperative Exploration Agreement (representing approximately 33.48% of the total Income Sharing Rights of Maochang Mine) to the Company. Upon completion of the transfer, the Company will own approximately 91.63% of the total Income Sharing Rights of Maochang Mine under the Cooperative Exploration Agreement.
Since Maochang Mine has not yet started operation, for the financial years ended 31 December 2014 and 31 December 2015, no net profit (before and after taxes and non-recurring items) was involved in the Income Sharing Rights under the Income Sharing Rights Transfer Agreement.
Consideration
The consideration is RMB349.95 million which is determined by both parties after arm's length negotiations with reference to the appraised value as at the Valuation Base Date as set out in the valuation report issued by Chongqing Hourun in respect of Income Sharing Rights.
Payment
The Company shall pay 80% (i.e. RMB279.96 million) of the transfer consideration to Chinalco prior to 30 June 2016 (subject to the receipt by Chinalco's bank account) and pay the balance amount prior to 31 December 2016.
Warranty of Chinalco on relevant Income Sharing Rights
Chinalco warrants that it legally owns the Income Sharing Rights under the Income Sharing Rights Transfer Agreement (representing approximately 33.48% of the total Income Sharing Rights of Maochang Mine).
PROFIT FORECAST IN RESPECT OF THE VALUATION METHOD
As the discounted cash flow method was applied in the aforesaid valuation report prepared by Chongqing Hourun in relation to the Mining Right and the future income discount method was applied in the aforesaid valuation report prepared by Chongqing Hourun in relation to the Income Sharing Rights, the calculations of the Mining Right and Income Sharing Rights of Maochang Mine as set out in the two valuation reports are deemed as profit forecasts under Rule 14.61 of the Hong Kong Listing Rules. Accordingly, the Company discloses the following valuation details in compliance with Rule 14.62 of the Hong Kong Listing Rules.