China's CNMC to acquire Australia's Lynas for A$505 million

02 May 2009

China Nonferrous Metal Mining Co. Ltd.(CNMC) is set to acquire majority stake in Australia's rare earth miner Lynas Corporation through a A$505 million ($366 million) deal signed yesterday.

The deal includes direct injection of A$252 million through fresh equity and the balance by way of Chinese bank loans to the cash-starved miner for the development of its stalled Mount Weld project in Western Australia and setting up of advanced concentrate processing facilities in Malaysia.

CNMC will get 700 million new Lynas shares at 36 cents a share securing a 51.6 per cent hold in the company, effectively doubling the size of the rare earth miner.

The Chinese would also guarantee two bank loans of A$143 million and A$110 million making the total value of the deal to A$505 million. An additional provision of A$21 million is also included in the deal within 10 business days of the agreement for working capital.

The deal has to get approvals from Australian and Chinese regulators apart from the shareholders of Lynas.

If approved, CNMC will get four seats in the eight member board of Lynas with the company's executive chairman Nicholas Curtis holding the casting vote.